General Information About How To Pay Back Your Mortgage Quicker
There are several specific stuff you can do to lessen the cost of borrowing and shorten the duration of your mortgage. There are numerous benefits to shortening your mortgage. The main advantage is that you will end up paying less for the cost of borrowing the money. It is possible to free up money for various areas of your life, like education for yourself or your children, an emergency fund and retirement money.
One of the easiest ways to pay down your mortgage faster is to increase the frequency of your payments and make more payments. It is better to speak to your mortgage professional to have them show you the benefits of how much you would ultimately save by making weekly or biweekly payments instead of on a monthly basis. The more frequent payment plan can end up saving you hundreds of dollars in annual interest costs.
It is a wise idea to put down the biggest down payment you could afford. Doing this would significantly reduce the duration of time it takes you to repay the mortgage. When it comes time to renew your mortgage and if interest rates lessen, you might want to think about applying more money to the principal and keeping your payments the same.
Nearly all mortgages would allow the borrower to make a payment once each year for up to 20% of the mortgage. Prepayments and anniversary payments if made will go directly towards the principal. This will save you plenty of money in annual interest costs. Some people decide to use their tax refund or annual work bonus for this kind of payment.
Other good alternatives consist of making double payments whenever possible and lump sum payments whenever your financial situation allow.
Choosing a shorter length of time to repay your loan will save you much in the end too. Ask your mortgage professional to show you the breakdown in savings on how choosing a 20 year amortization period compared to to a 25 year amortization period will affect your payments and interest costs. If possible, think about selecting a 15 year term. Though your mortgage payments would be higher, you would end up paying considerably less in interest over the course of the loan.
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