Practice Your Mortgage Payments

Practice your mortgage? What exactly does that mean?

Well, if you’re a first-time buyer and just beginning to explore the housing market, chances are you’re currently renting or living with family. Either way, it's a great idea for you to start getting used to your new mortgage payment right away.

Let’s suppose you’re paying $2,100 monthly rent and planning on buying a home for $650,000. With a 10% down payment, plus typical maintenance fees and taxes, your new monthly payment would be $3,100. The idea is that if you start paying yourself the difference between your current rent and your new mortgage payment, then deposit that $1,000 into an on-line savings account, you'll be considerably further ahead.

Why would you want to do this? Well, for starters, you’ll get used to the amount that will eventually be your real housing payment. If that isn’t compelling enough in itself, consider that you’ll also be putting away extra money to help with your new purchase, pay your closing costs, or treat yourself to something special as a housewarming gift.

The sooner you “practice your new mortgage”, the better. Start getting used to your new mortgage payment right away!

Now, if you're already a home owner and looking to buy up, the same principle applies. Once you’ve determined the monthly mortgage payment on your potential new home, increase your existing mortgage payment by that amount. You’ll be prepared for the reality of your new payment and pay down your mortgage faster in the meantime.