Pay Your Mortgage Earlier For Peace Of Mind!
Paying off your mortgage early is the surest way to give yourself a peace of mind especially when there is so much on your plate. Early payment of mortgage makes sense because most people want the security and psychological merit that comes with home ownership free from the burden of debts. While finding experts who offer recommendations for early payment of mortgage is an ideal step, you can still pay off your mortgage using methods that are faster and safer as compared to others. Here is a look at some of the effective ideas for loan payment.
The magic is usually in the mortgage calculator. When you play wisely with the mortgage calculator, you will clearly see how the addition of little payment to your principal here and there significantly reduces the length of your loan. The key thing here is trying to figure out an affordable amount of money that can reduce the loan-term without affecting your financial position. When you pay a little more principal, you get a bonus. As your principal gets lower, payments made henceforth are applied on your principal. Always make sure that when you are paying extra, it is applied on the principal balance instead of being set aside for the next payment.
Short-term mortgage refinance
A 15-year mortgage is quite common though you can refinance into a mortgage for 10, 15 or 20 years. Therefore, you may want to consider a 15-year mortgage because it may not be as high you think even though people think high payment is involved. The advantage of a 15-year mortgage is getting committed to the higher payment. You hardly get a chance to dither about your ability to afford the extra payment every month. In that case, you can achieve the effect of a short-term mortgage (when working with a 30-year loan-term) by making payments as though you were paying for a 15-year loan-term. This puts in you in control instead of the money lender.
Consider biweekly payment option
A year has 52 weeks and 12 months. Biweekly payment works best when you make plans while factoring 52 weeks and 12 months in a year. Therefore, when you pay half the regular mortgage payment every other week, you will make 26 half-payments by the end of the year. That is equivalent to 13 full monthly payments. This extra amount of money at the end of every year can chop off about 5-6 years of your 30-year mortgage. You can check with your bank to see if there is any arrangement for a biweekly payment plan. Some banks will charge while some will offer free service.
It is everyone’s dream to own a home without the stress of pending mortgage payments, foreclosures, high mortgage rates and the like. With these three simple ideas, you can take your time to figure out one that is likely to benefit you the most. All these ideas aim at reducing your mortgage payment making it possible to pay it off earlier so you can have peace of mind in your lovely home.