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How to Manage a Large Mortgage Payment after Buying a High Value Home

large hm1There are some people who apply for as small of a mortgage payment as possible so it fits easily in their monthly budget, but there are others who opt for a larger home that stretches their monthly budget. Recent economic events do show that those who have gotten over extended may end up in a dire financial situation. However, in buying a larger home with a higher mortgage do have some benefits if you can afford to do so.

The growth rate on equity will typically be more significant, and the tax advantages and deduction may also be greater. If you are looking to purchase a property with a larger monthly mortgage payment, you may want to follow these few tips.

Debt Reduction

One of the best ways to ensure that you can afford a larger mortgage payment is to reduce your monthly debts. If you look at the difference of having $700.00 a month in credit card payment or the equivalent in alarge hm2 higher mortgage payment, the benefit will be with mortgage payment. Most credit card payments are usually mainly paying interest which has no benefits for you.

Your mortgage payment will be building equity through principal reduction on the asset, plus the interest has a tax benefit for you. The problem is the additional $700.00 per month payment has to be affordable for you. If you can pay off or drastically reduce your credit card debt before you take on the higher mortgage payment will make the new payment affordable for you. You may also want to close most existing credit card accounts so you don’t accumulate additional debt while you are paying a higher mortgage payment.

Increased Savings Account

large hm3Next you should increase your savings account, as the best budget with a larger mortgage payment is one that allows you to still save money on a regular schedule. If you cannot save money and pay a higher mortgage payment, chances are that you have taking too much debt that you can afford.

The rule of thumb is to have at least three to six months of savings to cover your expenses in case of a worse case financial situation. You will feel more at ease with your larger mortgage payment when you have money put back to support yourself in the event of job loss, injury, or other unexpected events.

The benefits of a larger mortgage payment is that it may help you live in larger, nicer home, enjoy better tax deductions, and build equity quicker. But, you need to make sure that your mortgage payment is affordable for you. By following these few tips you will be able to take on a larger mortgage payment with confidence.

moo thorpe headshotWhether you are selling your home, or buying a home, I can help you with your endeavor. Please contact me at 505.780.0310, or email me at moo@moothorpe.com and I will be happy to assist you.

 

 

 

 

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