When it comes to owning your own home, there is more to it than changing the air filters, trimming the hedges and mowing the lawn. You have to know the landminds that are presend in the landscape of the mortgage industry. Many loans which seem like good deals are padded with fees which make the low interest rate not so appealing.
Should I Pay Extra Each Month To Pay Down My Principle?
This is a practice a lot of people do and it tends to being traced back to a financial seminar of how to grow your personal equity quickly. In years past, real estate was a solid investment. Your home was the greatest investment most people made during their lifetime. However, when the market crashed in 2008, affecting over half of the real estate in the United States and lasting for four straight years, people are more cautious.
A wiser move would be to treat your home as a tax haven, as the interest on your mortgage can be written off against your income and the rest you chalk up to as “rent.” Instead of paying down your mortgage, put the money away into a savings account, or make sound investment choices. Because the interest on your mortgage is so low, it is better to have your money working in other ways for you.
Should I Pay Off My High Interest Credit Cards With A Home Equity Loan?
Most think this is a wise move that you are paying off a high-interest loan with a low-interest loan. Actually, this is a bad decision. If you have high credit card balances, this means that you lack financial discipline. The chances of you racking up the balances again are very high and you’ll find yourself in the same situation in a year or less.
Another bad element to this move is you are moving unsecured debt to a secured asset, your home. That is a real bad idea. A better decision is get credit counseling, make a budget, stick to it and get a second job if you have to in order to pay off the balances. The only way you will learn financial responsibility is to go through some pain. Getting a home equity loan is a pain-free exit from a mistake.
When To Pay Off a Mortgage Early?
Paying off your mortgage can be a smart move if you plan to live in your home for many years. The “many years” would be equal to at least ten years beyond the original mortgage payoff date.
Home Mortagage Audit
Regardless of how long you have been in your home, you can audit your mortgage to uncover charges or even errors that are costing you money, sometimes big money. Mistakes are most common in adjustable-rate mortgages (ARMs) than fixed-rate mortgages.
You should consider doing a home mortgage audit if your mortgage has been sold or transferred to another financial institution. A sure sign that there is a problem is your interest rate on your statement is going down but your payment each month is going up.
How can you find a mortgage auditor if you don’t feel comfortable doing it yourself?
Go to your bank and speak with the manager and express your concerns that you would like to hire one of their mortgage specialists to review your mortgage to make sure you were taken care of before. Often, they will provide the service at no charge, or at a discount. Normally the fee for this service is $150-$350.