Before you decide to borrow, ask yourself these five questions
When it comes to debt, we’re not in favor of total abstinence. We’re in favor of sensible, practical borrowing for particular situations, consistent with your goals and your finances.
For many, being in debt is an uncomfortable situation. However, it is important to be able to separate so-called "good" and "bad debts." This excerpt from How to Speak Money, by Ali Velshi and Christine Romans, lays the foundation for those looking into borrowing money, especially those who are new to the process.
There are some situations in which borrowing money is essential. A new home, for example is something most people don't have the means to pay for all at once. Mortgages make the transition from renting to owning possible. And with today's low mortgage rates, what often seems to be a dream for many is swiftly becoming a reality.
So what should you ask yourself before applying for that new mortgage? First and foremost, it is vital to know your budget. Sometimes, what you can afford and what is reasonable are two different things. It is also important to think about how this will affect you, your family and your financial future. For many, purchasing a new home becomes a lucrative investment over the years. Knowing where you stand financially now and where you plan to be in the future is necessary before diving into a mortgage, especially for first time buyers.