WASHINGTON, D.C., USA — Buying a home can be the happiest time in a person’s life. But understanding mortgage loan rates can be highly stressful. Here are answers to some frequently asked questions from The Yi Team of Fairway Independent Mortgage Corp.
Q. Should I make extra payments on my mortgage to pay it down?
A. Although having a mortgage may seem like a burden, there’s no need to strain yourself financially to pay it down. If you have extra income, you’re better off investing it in stocks or accounts with a high return potential.
Q. How long should I keep my mortgage paperwork?
A. If you’ve just applied for a mortgage or you’re refinancing your current one, definitely keep that documentation handy at least a year for tax purposes. If you’re worried about years of paperwork taking up too much space, you can always save it digitally.
Q. What’s better- a 15 or 30 year loan?
A. The bottom line is borrow as much as you can for as long as you can in a low interest rate environment. You can pay off your mortgage sooner with a 15 year loan, but if you have your money invested in outside accounts for a longer period of time, your net worth will grow more. You’d ultimately be able to pay off that 30 year loan sooner.
Q. Do I need to make a 20% down payment to buy a house?
A. No. By the time it takes to save that amount of money, your dream home most likely will have gone up in value. You can put 0% down if necessary, but it’s best to put a small amount down (3-5%) to have some equity stake in your home.