When and how to payoff your mortgage quicker
Owning your home outright — with no more monthly mortgage payments — may seem like a dream come true for many homeowners. But as mortgage tips go, that’s not always the wisest option. Paying off your mortgage has its pros and cons. So before you do anything, take a look at who might best be served by engaging in mortgage tips like the one that gets rid of those monthly payments.
Good reasons to pay off your house quicker:
- You’ll have more resources to devote to the stock market and your overall investment portfolio. The stock market might give you more bang for your buck than real estate.
- You’ll get a boatload of peace of mind when you don’t have to worry about making mortgage payments if your job situation changes, the stock market plunges, or you’re near retirement. Paying off your mortgage takes one more bill off your back.
- The process forces you to reduce your spending habits and save. You’ll have to follow a strict guideline of mortgage tips to find the extra money required to get that pay-off completed.
Reasons not to pay off your mortgage:
- Keeping your payment the same over the lifetime of a 30-year mortgage (assuming you have a 30-year fixed), gives you a hedge on inflation. While the price of everything else skyrockets, your monthly housing costs remain relatively stable.
- In the long run, if you’re a wise and committed investor, you can parlay the extra money you would have put toward your mortgage into a bigger pile of cash.
- While you’re paying more in interest, you’re able to write off that interest on your taxes, which lowers the taxes you’d otherwise pay. Depending on your income, that might mean a lot.
Think Ahead or Plan Accordingly
While a 30-year mortgage may have looked ideal when you bought your first home, the thoughts of keeping that house and making that monthly payment for 30 years seems endless. When you are first buying a home then, consider a 15-year mortgage. The interest rate may be anywhere from one-quarter to three-quarters of a percent lower, and you’ll be forced to pay it off quicker.
On the other hand, refinancing a 30-year fixed into a 15-year mortgage may not be the best move. You must requalify and go through all the paperwork (and pay the associated fees) that you did when you got your first mortgage. So unless you can get a substantially lower interest rate, you may be better off just paying off your existing mortgage.
Ready, Get Set, Go
Once you’ve thought about it and compared your personal pros and cons, you may then be ready to take the steps necessary to pay off your house quicker. It takes discipline and a clear vision of what you want in your future. Keeping your eyes on the ultimate goal helps you put these mortgage tips into practice.
Play around with the math. A popular and easy approach to paying down your mortgage quicker and saving a bundle in interest is to send more money each month, directing your lender to apply everything over and above the payment to the equity. For example, if you just add one-twelfth of the monthly payment each month, you’ll have technically made 13 payments in a year. Another practice to pay off your home more quickly is to send a house payment every two weeks instead of monthly.
Mortgage Tips to Take to the Bank
One caveat when you get into the practice of paying off your mortgage quicker is to make sure you’ve talked with your lender. An independent mortgage lender such as Zachery “Zack” Adam of GoPrime Mortgage, Inc. . (dba PrimeRate Mortgage Lending), for example, can review your options to help you decide. Contact Zack if you want to know whether a quicker payoff is right for you. He’ll also give you mortgage tips on how to accomplish your goals.
Every lender may have different requirements for applying extra payments. A popular option for getting to a quicker payoff is to send bonuses, gifts and unforeseen windfalls directly to your lender to bring down the pay-off on your home. As you follow these and other mortgage tips, just make sure you follow your mortgage lender rules and guidelines closely; this is an important step, and you don’t want to be paying more interest.