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This Old House - Do-it-Yourself

Mortgages and Money: How to Manage Your Payments

Written by Posted On Wednesday, 10 January 2018 12:28

Your mortgage payment likely is one of the largest expenses in your regular budget, and it also may be one of the most important. After all, this is your housing payment, and you must keep up with it if you want to continue to have a roof over your head. Managing this rather large payment can be difficult for some homeowners. These tips will help you to better manage your mortgage payments.

Set up Affordable Payments

If you have not yet set up your mortgage, it is wise to review your budget before you apply. Ensure that the projected mortgage payment and any other housing-related costs are included in your budget. You should have ample cash left over each month after all expenses are paid. Only apply for a new loan if you are confident that the payment is comfortably affordable. If you already have a mortgage, consider refinancing it if the payments are not affordable. An alternative that may work well for some people is to ask your lender to set up smaller bi-weekly payments.

Plan Ahead

After your mortgage is set up, you need to prepare an extended budget that covers at least the next six months of expenses. You should continuously update this budget so that it regularly projects your income and expenses out for the upcoming six months or longer. When you plan ahead in this manner, you can account for fluctuations in income and expenses. This may include losing income if you take a vacation, adding expenses during the holiday season, paying HOA dues quarterly, and more. By doing so, you can better manage your money.

Create a Rainy Day Fund

Even when you take considerable steps to budget and financially plan for the immediate future, unfortunate events can happen at any time. For example, you may need to file an insurance claim and pay a very large deductible in the process. This type of expense can throw your personal budget off track and may make it difficult to pay your home mortgage expense on time. Create a rainy day fund that has enough money in it to pay for most emergency situations that could arise. An alternative is to keep at least three to six months’ worth of expenses in the rainy day fund.

Your mortgage payment affects your ability to continue to live in the house, your equity accumulation and even your credit rating. Use these tips to set up an affordable mortgage payment and to stay on top of that payment.

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Rachelle Wilber

Rachelle Wilber is a former real estate agent now turned freelance writer that specializes in home realty, mortgage, and building. She graduated from San Diego State University with her Bachelor's Degree in Journalism and Media Studies.

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