How and why to finish paying off your mortgage sooner than 30 years.
Do you want to be out of debt before the end of your 30-year mortgage and save some money? Many first-time homebuyers choose a 30-year loan, but changing that from 30 years to 15 is pretty simple; it just requires a little discipline.
This will help you increase your cash flow and pay less interest. However, you may lose a little bit of the interest deductions on your tax return, so make sure to look at all of the numbers before you make a decision.
Still, one benefit I like to make note of is saving money on your principal mortgage insurance (PMI). This is added to your monthly payments, and it’s what the banks charge you to keep their mortgage products safe from foreclosure. You’ll be charged for that until you have 20% equity in your own home. If you pay a little more on your mortgage each month, you can get to that point sooner and not have to pay the PMI fee.
Also, you can pay off your mortgage monthly or annually. If you do it monthly, you can take whatever money you have left over for the month and use that to pay more of your mortgage. If you want to do it annually, you could use your tax return, for example. Just make sure to tell the bank you want to apply it to your principal. In addition, check your mortgage documents when you close and make sure they don’t have a prepayment penalty included.
If you have any questions or want to see some graphs on how much you can truly save, call or email me! I would love to show you. Also, if you’re wanting to buy, sell, and/or invest in real estate, please contact me. You can even stop by the office in person! I look forward to talking with you.