When you think of buying a home, you may be thinking, “30 year mortgage?! I’ll be paying this off for the next…. 30 years?!”
However, this is most likely not the case. You are not as “locked in” as it seems.
This may not be the forever home
Most people do not live in the first home they buy for the rest of their lives. Some statisticians say that Americans on average move over 11 times in their lifetime! So, even if you buy a home, the likelihood that it is your “forever home” is not high. When I advise clients, I typically recommend that you find a home that you can live in for 5-10 years.
While some think that renting is very flexible, so is owning a home! Of course you can sell this home in the future, and release yourself from the 30-year loan.
You have loan term options
Most don’t realize that you can choose a different loan product than the 30 year loan. It’s possible to get loans for 10, 15, 20, and up to 30 years. While most choose a 30 year loan to keep payments low, this is not the best choice for all. If you can handle the payments on a shorter term, you will pay much less interest over the life of the loan.
You can refinance for a shorter term
Another likely situation is that you will refinance your home at some point in the future. If you are in a high interest rate environment, you will probably want to refinance when rates come down.
If rates drop enough, it may make sense to also reduce your loan term. This means you may start with a 30 year mortgage, but it does not have to stay that way. In a year or two, you may refinance with a loan term of 15-20 years, and still pay the same amount monthly because the interest rate has dropped so much. There goes half your loan time!
So, the ultimate answer to the question depends on your goals and your financial situation. Yes, a loan is a commitment. But a loan is a commitment that may change with time, your situation, and market conditions.
Entering the world of buying a home can be exciting, but also scary. Have some patience with yourself as you consider this new commitment and what it may mean for your future. And, get help with answers to your questions as often as you need!
Learn more about buying a home by reading other posts in this blog. Or, give me a call so that I can help you through the process on an individual basis. My cell phone number is 480-639-9640.
