Determine Your Priorities

• Mortgages can be customized to the needs and preferences of the people who hold them. Options range from biweekly or monthly payments to amortization dates to options such as prepayment and payment increase variables. Before taking out a mortgage, research your options and design a mortgage package that is in keeping with your ability to service it. Consult with your banker or mortgage professional so that you are fully informed about the options that are available to you. The type of mortgage that you choose may affect what kind of house you are qualified to purchase.
  
  

Freeing Up Money in the Short Term

• If you purchase a home during a time in your life when you don't have a lot of money, you may be more interested in minimizing your payments than in shortening the length of your mortgage. To do this, taking out a mortgage with a long amortization period, for example 30 years, will allow you to make relatively low monthly payments. If you acquire a mortgage with prepayment options, you can then increase your monthly payments at a later date when you have more income. Maintaining this flexibility allows you both the ability to attain a mortgage with a lower income and the ability to accelerate your amortization date when circumstances allow.
  
  

Saving Money in the Long Term

• If you have a healthy income at the time that you take out a mortgage, and you are interested in minimizing the amount of money that you spend over the life of the mortgage, it makes sense to maximize your payments from the beginning. Because of the interest structure of the mortgage, the payments that you make in the first years of the mortgage have the largest impact on its length and the amount you spend on interest. By making large payments and even prepayments during the first few years, you can save thousands of dollars and remove years off the end of the mortgage.
  
  

Building Equity

• Equity is the amount of wealth that you have invested in your property. If you own a $300,000 home with a $100,000 mortgage, your equity in that home is $200,000. The more quickly you pay off your mortgage, the faster you build equity in your home, and the more economic advantages you can gain from it. Another common way to build equity in your home is through maintenance and renovation while you live in it. By undertaking improvement projects while paying off your mortgage, you are simultaneously increasing the value of your home as you decrease the amount of money that you owe for it.