Is Paying Off a Mortgage Early a Good Idea?
Many consumers are confused about whether or not paying off a mortgage early is a good idea. Below you’ll find some helpful information about paying off a mortgage early.
Don't Rob Peter to Pay Paul
It’s definitely not a good idea to make larger payments on your mortgage then necessary if doing so will cause you to fall behind in your other bills. Paying off a mortgage does have advantages for many consumers especially those who like the sense of security it provides, but you have to be realistic about how much extra money you can afford to pay on your mortgage.
Obviously if you pay extra on your mortgage each month you are paying down your principal sooner and will ultimately reduce the amount of interest you have to pay. If you have a good fixed interest rate, you might not want to leap into paying off your mortgage early. There are certainly worse types of debt to have, and you should always address your debt that has the highest interest rate first.
Don't Overlook The Tax Issue
It’s important to take into consideration the tax deduction you will receive for the mortgage interest you pay. You will be losing out on that benefit if you are paying off a mortgage early, so calculate this into the equation when you are determining just how much extra to pay on your mortgage every month.
Credit Cards First
If you have credit card debt, it isn’t really a good idea to focus on paying off your mortgage early. Basically, the interest rates on your credit cards are going to be much higher than the interest rate on your mortgage. Until you eliminate your credit card debt, you don’t even want to think about paying off a mortgage early.
Use The Tools Available To You
There are online calculators that can help you determine just how much extra you would have to pay each month if you wanted to pay off your mortgage by a specific date. The calculators can also help you determine when you mortgage would be paid off if you have an extra $50, $100, or $200 to pay each month. As you can see, there is no clear cut answer about whether or not paying off a mortgage early is the best option for everyone. Use you judgment and research your options before you make a decision about paying off a mortgage early.
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Posted Monday, January 12, 2009
What a Refinance Mortgage Can Do For You
Why a refinance mortgage may be your best bet.
Considered a refinance mortgage lately? You may want to! There are a number of reasons why one would want a refinance mortgage. I’m going to review some of the top reasons why you might want to consider a refinance mortgage for your financial needs.
Lowering Monthly Payments
A refinance mortgage is a great way to lower your monthly mortgage payments. Let’s say that you currently owe $100,000 on your mortgage but you only have 20 years left to pay on a 30 year mortgage. If you refinance that mortgage over 30 years instead of 20, your monthly payment could drop considerably.
While it may not be ideal to refinance your mortgage for a longer period of time, a refinance mortgage can really come in handy if you just can’t make your monthly mortgage payments at the rate they are currently.
Lowering Your Interest
One of the most common reasons that people pursue a refinance mortgage is to lower their monthly interest rates. If interest rates are at least one percent lower than the rate you are currently paying, a refinance mortgage may be in your best interests.
Even at just a one percent difference, a refinance mortgage can save you tens of thousands of dollars. For example, if you were paying $100,000 off at 7 percent over 30 years, you’d pay a total of $239,508. However, if you were paying that loan off at 6 percent, you’d pay a total of $215,838, a difference of $23,670. That’s quite a bit of money that a refinance mortgage can save you.
Cash-Out Refinance
A cash-out refinance mortgage is another reason that people pursue a refinance mortgage. With a cash-out refinance, you can refinance your home at a different interest rate and you can also get cash for the equity in your home. This type of refinance mortgage can enable you to make necessary home repairs or home improvements or you can use the money for debt consolidation or other financial needs.------ end of article ------
Posted Monday, January 12, 2009
The Foreclosure Market: Invest In Real Estate Now!
Is The Foreclosure Market Bad For Everyone?
Thanks to the sub-prime mortgage bust, the rate of foreclosures is at an all-time high. Millions of individuals who were provided sub-prime loans have begun to default on their mortgages as the interest rates move from fixed to variable or as the principle balance is added to the monthly payments (for interest-only mortgages). Uneducated homeowners have found themselves stuck with mounting monthly payments that they are unable to afford as the economy sinks into a recession.
Where's the silver lining? The situation has created a new opportunity for individuals seeking to capitalize on falling property values in response to the flooded foreclosure market.
The Government Bail-Out
In response to the mortgage credit crisis, the government is backing troubled financial institutions and offering incentives for buyers to purchase homes that are being foreclosed, so that they do not sit on the market for extended periods of time and negatively affect the lenders that hold the mortgages.
Opportunistic real estate investors were already eager to capitalize on the flood of foreclosed properties, and government incentives have made the choice almost too easy to make.
Easy To Buy, Difficult To Finance
Thanks to the abundance of properties on the market, it is easy enough to find a property and pay bottom-dollar for it. Thanks to the sub-prime mortgage mess, however, it may be significantly more difficult to obtain financing.
Buyers and investors need to be prepared to provide sizeable down payments (instead of seeking loans that require no money down or low money down) and agree to higher interest rates, depending on the level of risk incurred by the lending institution.
This is not to say that creative financing is not possible, but it does require significantly more creativity at this point of the mortgage loan cycle.
The Real Estate Investor's Silver Spoon
While the sub-prime mortgage mess is catastrophic for delinquent homeowners and their associated lending institutions, it gives real estate investors the chance to realize significant windfall profits if they are willing and able to take the risk.
Economic cycles are inevitable; those who can handle the downturns of this foreclosure market may benefit at the peak of the next cycle if they seize opportunity and buy now!