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Paying Your Mortgage Off Faster…

Guest post by: Brian King

Article Overview: They say money makes the world go round. And when it comes to the real estate market they are right. Houses are not free and everyone needs somewhere to live.

Paying Your Mortgage Off Faster…

They say money makes the world go round. And when it comes to the real estate market they are right. Houses are not free and everyone needs somewhere to live. Well when we don’t have enough cash or equity to simply pay for a home we often do one of two things: people usually rent an apartment or home from a landlord and serve as their tenant, or people will buy a house/condo/townhome, etc. by obtaining a mortgage.

This article is going to focus on the latter. Some people consider a mortgage to be a huge burden that they spend their whole life focusing on paying off. Other’s view it as business capital that allows them to purchase an asset (in this case a house) that they can invest in and then years later turn around and sell; so in other words using other peoples money (the bank or another lending institution) to make a large investment. While finally some simply view a mortgage as a privilege, allowing them to make the biggest and best purchase of their lives, not a house but rather a home. A place where they can raise a family, enjoy life, and grow old happy.

No matter what the situation is the truth is that whenever someone takes out a mortgage the truth is that they owe a lot of money to someone. And that they are in debt. We have all been there. Whether it is with our own mortgages or with a line of credit, or car payments, or credit card payments we all love what this “debt” allows us to do and have but we all hate the feeling of owing that money to someone or something (aka a financial institution). There is always that little voice in the back of your head reminding you of the debt and there is also that lovely interest that attaches itself to our debt and causes it to grow. All we want to do with our debt is get rid of it all, especially when it comes to our mortgages. We appreciate what they allow us to have but in reality we want to get rid of them sooner rather than later.

In order to do so there are actually a number of ways to help to pay your mortgage down faster, perhaps even faster than you would have originally anticipated. Here are four tips that could save you big bucks in regards to the interest on your mortgage, giving you extra money to spend on the other things in life.

1. Changing your payment frequency. Typically you can chose from monthly, semi-monthly, bi-weekly (accelerated and non-accelerated) and weekly (accelerated and non-accelerated) payment schedules. If you chose a weekly or bi-weekly accelerated payment option you will end up paying your mortgage off quicker and save yourself a whole whack of interest because you are making more payments every year and paying off more every year. It is also a large difference in regards to the amount of interest you will save when comparing to the monthly and bi-monthly payment schedules.
2. Increasing the amount of your payments. Most financial institutions who hand out mortgages will allow you to increase the amount you pay per payment, some allow this choice only once per year while others allow it once per term. The amount you can increase your mortgage payments by usually varies somewhere between 10 and 20 percent. So for example if you normal mortgage payment is $1000 per month you may be able to increase it to $1100 or $1200 per month (a 10 percent or 20 percent increase). This extra amount each month will help to reduce your principal and therefore allow you to pay off your mortgage faster. The only downfall to increasing your payment amount is that usually once you chose this option it is often permanent, or at least you can’t make another change until the next renewal date, and so you need to make sure you can afford to keep paying that increase.
3. Making a lump sum payment. Almost all banks and other mortgage lenders will let you make a large lump sum payment towards the mortgage principal which will go directly towards your principal and reduce the balance owing. Institutions vary in regards to what percentage they will allow but some allow up to 20% of the original mortgage amount. This option is usually only available one time per year. However, every lending institution has their own rules in regards to when and how much you can pay in regards to a lump payment.
4. Shortening Your Amortization Timeframe. There are renewal dates that happen at the end of every term during the lifespan of your mortgage. If the interest rates you get after a renewal date are around the same or even perhaps a little lower than you might want to consider shortening your remaining amortization. This means for example moving your 25 year mortgage to a 20 year timeframe. This will result in some adjustments that will allow your mortgage to be paid off quicker.

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Article Tags: money makes the world, mortgage, mortgage agent, real estate market, second mortgage
Referred by: http://www.searchengineworkshops.com



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