When deciding to purchase a home, one of the most important things you can do is make sure you fully understand the terms of your mortgage. Most mortgages are 15- or 30-year mortgages, although some may go up to 40 years, and the interest rate you receive will largely depend on your credit score. A credit score of 620–639 could land you a rate of around 4.3%, while a score above 760 could get you a rate around 2.7%. Along with the monthly mortgage payment, it is also important to consider the additional cost of homeowners insurance, homeowners association fees, and property taxes. If you live in Hawaii, the property tax may not be too much of a burden at 0.27%, but if you live in a place like New Jersey where the rate is 2.44%, this makes a considerable difference. Before investing, it’s important to know your risk tolerance. Stocks are considered riskier investments, but they offer a greater chance at higher returns. Bonds are safer investments, but their returns are much smaller. Consider mixing up stocks and bonds in your portfolio to hedge some of the risks. Young investors can take more risk because they have longer to recover if something bad happens in the market. As you get older, you should have less risky investments in your portfolio to help protect your money from downturns in the market as you approach retirement.
