A mortgage is a big debt that people have to pay off in a number of years. Typically, the home mortgage is the most expensive financial burden that people will carry throughout their lives. It is important, especially when balancing two different mortgages, to avoid certain pitfalls that will make that burden heavier to bear. When properly researched, mortgages can be secured with low interest rates, low fees, and fixed payments monthly, which are beneficial for you.
Two of the typical dreams of any American is to have his own house and have his own car. Many people, after college and when entering the working life normally set their eyes on a car first, then after a few years, invest in a house (normally when a family is started). Most people get an auto mortgage so that they can drive their own vehicle. People also get a mortgage for their home, if they want their own. The question now is, is it wise to have two mortgages and be able to balance them at the same time? Let’s take a look.
Prior to application
Is it wise to apply for two mortgages at the same time? Let’s take a look at some factors. Normally, lenders take a look at credit rating and credit history. If your history is good (meaning you are able to pay on time), and they see that you have enough income, they will most likely give you both mortgages. However, if you don’t have a good credit history and/or they deem your income is insufficient, they will either decline your application or approve it but with higher interest rates. It is best for you to have a good credit score, make sure to pay your debts on time, and look around for the best deal for you, as there are a lot of lenders out there that can give you lower interest rates.
That being said, it is best two have only one mortgage at a time, so that the financial burden is not too big. Admittedly, there may be instances where you could have mistakenly gotten two mortgages. What then should you do when faced with that situation?
Balancing two mortgages
When faced with a heavy financial burden, the usual response is to just default the mortgage. This is not good as you will be red-flagged by not only your lender, but credit score companies as well. Fortunately, there are practical steps you can take in order to ease your burden.
- Talk to your lender – If you’re having difficulty paying off your mortgages, try talking to your lender and have him present all options on the table. You might find something that would be easier for you, perhaps in the short-term or maybe even long-term. Some lenders relax payment schedules, while some even reduce monthly payments. It will not hurt to have your lender present different options.
- Renting out – For those with two home mortgages, you could consider renting one home out and getting some income for it. It may not pay for the mortgage in full, but at least there’s income to make the load lighter.
- Refinancing – Consider this option so that your interest rate will be lowered. Remember, when faced with a heavy burden, every little bit helps.
- Avoid unnecessary expenses – These only make things more difficult. For example, avoid car accidents as this will add to your financial burden – paying for the car repair and the services of auto accident attorneys are examples of unnecessary expenses you must avoid.
Balancing two mortgages is a possibility, although it is not recommended. If you must, then follow these tips in order to properly balance them.