Home loans are huge financial commitments. With most mortgages spanning 15 to 30 years, paying off your mortgage the traditional way can be a financial strain. In some cases, mortgage payments can stand in the way of retirement plans, family vacations, and other better uses for your money. Don’t get stuck paying a home loan in Plantation longer than you have to. Use these five tips and tricks for mortgage repayment.
Tip 1: Purchase a Home Within Your Budget
If you’ve been pre-approved for a mortgage and you are searching for your new home, be sure to stay within your budget. A home lender may offer high sums toward your home purchase, but you don’t have to take more than you need. While looking at houses, having a set price you won’t go above is important to starting your home ownership journey off right.
That being said, don’t be afraid to negotiate with the seller to try to get a better price on the home of your dreams. Pre-approval for a home mortgage in Plantation puts the power in your hands, especially if the current owner is looking for a fast close. Put in a counter offer and continue looking—you never know if something better is just around the corner.
Tip 2: Pay More Than the Minimum
When you sign a mortgage agreement, the price listed in your paperwork is only the minimum amount necessary to pay back the loan over the designated period. Paying just $100 more than that can shorten the loan period substantially. When you only make minimum payments each month, you may notice your principle amount due never lessens. That’s because for the first few years the minimum payments are only going toward interest. Making larger payments helps you begin paying toward the principle sooner, lowering your overall interest due.
You should also consider making bi-weekly payments rather than monthly payments. On average, this will result in one additional payment a year, which adds up.
Tip 3: Save Money Where You Can and Put the Extra Toward Your Mortgage
Small changes in the way you spend your money can help you pay off your mortgage early. Limiting your fast food intake to one meal a week can save you hundreds of dollars a month. Look at your other expenses and check for the best ways to lower those costs. Call your cable and internet provider and see if you can get a better deal—these companies would rather retain current customers than spend money trying to acquire new ones. Other ways to save include signing up for discount cards at gas stations and grocery stores and taking advantage of coupons and price-match programs.
Take any extra cash you come into toward your mortgage. It can be tempting to use it on other things, but every dime counts toward getting your home loan paid off as fast as possible.
Tip 4: Do the Math and Refinance
If you’re already in the process of paying off a 30-plus year mortgage, refinancing may be able get you a better deal. Your home may have increased in value or qualify for current low interest rates. Either way, use your last statement to determine how much is still owed, then crunch the numbers to figure out how much you need to pay per month to reduce the length of your mortgage. For example, if you want to pay it off in five years, divide the amount due by 60 (the number of months.) A mortage lender in Plantation like Ace Mortgage can help you determine what plan is best for you. We can even guide you through the refinancing process.
Tip 5: Consider Renting Extra Space
Do you have an extra bedroom or attached efficiency? Consider renting it out to help cover mortgage costs, potentially helping you cut the length of your mortgage in half. The extra income can also help cover other home costs like utilities, property tax, and maintenance. Just be sure to vet any potential tenants properly and create a comprehensive leasing contract.
Explore your best options for purchasing a home as quickly as possible. Contact Ace Mortgage now to learn how we can help!