So, you’ve contacted Ace Mortgage about our mortgage services in Pompano Beach and successfully received a loan. Now comes the arduous part. Paying off a mortgage loan can feel like an eternity of debt. The most common loan term is 30 years. Therefore, it comes as no surprise that you’re looking for real solutions to pay it off quicker. Keep reading to see how you can get out of debt quicker with these tried-and-true strategies.
Make Larger Payments
In most cases, you will not receive a penalty for prepayments. As a result, if you want to pay extra on your loan’s principal each month, you should be able to. This comes with many advantages. First and foremost, you end up reducing your interest payments, ultimately paying less in total. How can you do this? Let’s assume you contact our mortgage services in Pompano Beach and took out a $300,000 home loan. You make monthly payments for the principal and interest of $1,370. Then, you decide you want to cut down several years on paying off your loan, so you start paying an additional $250 every month just for your principal payment.
After you’ve completely paid off your mortgage loan, you have additional spending money to do as you please. What will you do with the extra money? Many people put that money towards traditional, non-traditional, and socially responsible investments for the potential of high returns.
Make An Extra Payment With A Bi-Weekly Schedule
If your lender allows you to make biweekly payments, you can utilize this flexible schedule to make an extra annual payment. Instead of making a full payment every month, split your monthly payment in half and pay it every other week. By doing it this way, you will make one extra payment every year – 13 payments instead of 12.
Not every lender will allow you to make biweekly payments. Fortunately, our loan officers are aware that every buyer has unique needs. So, if you would like to be more flexible with your home financing in Pompano Beach, we’ll help find a lender for your exact needs.
Make An Extra Payment Each Year
If it’s too much of an inconvenience to make bi-weekly mortgage payments, you can also make your 13th payment at the end of the year. To make one lump sum, you can find extra money by tapping into your savings, using the funds from your tax return, or from your annual bonus. Again, you’ll have to run this new payment structure by your lender to see if it’s accepted and how it will be processed.
Refinance
Many homeowners refinance their mortgage when possible. Mortgage rates are currently the lowest they have been in years. It’s possible that your current mortgage rate is significantly higher than the rate being offered today. If you can reduce your interest rate by just 1 percent, you may want to consider refinancing.
Did you know you can also refinance for a shorter term? For example, if your current term is 30 years, you can change it to 15. You probably think you’ll end up spending more, but that isn’t the case. Yes, your monthly payments will be significantly higher, but your interest rate will be lower. You end up paying more in interest rates instead of principal payments with a 30-year mortgage. So, this strategy can help you save more overall and pay off your mortgage faster.
Contact our mortgage services in Pompano Beach. We’ll make it easy to refinance and help you maximize your savings.
Recast Your Mortgage
An alternative to refinancing is recasting. This is where you make one large lump sum towards your principal, and the lender will reduce your loan to reflect the new balance. Recasting may be more beneficial for some than refinancing because the former is much cheaper to do. However, you will need access to a large sum of cash, whether it be from:
- Your savings
- Tax return
- Company bonus
- Inheritance
- A loan from a trusted friend or family member
This is a good option over refinancing if you currently have a high interest. If your interest rate is low, refinancing may be the better option, as a lower rate may not be available when you recast.
Contact Ace Mortgage
As you can see, paying off your mortgage loan isn’t difficult. It just takes smart moves and discipline. Fortunately, Ace Mortgage will help you all the way. Call today about our mortgage services in Pompano Beach.