Welcome to the UtahHomeSellingTeam.com Blog

2017-12-13 06:56:59
How to Pay Off Your Mortgage Early

But Why It Might Not Be Wise

If you're a homeowner, you've likely thought about how to pay off your mortgage early.

That bill for your home loan arrives like clockwork every month, so it only makes sense for you to devise a fast and furious plan to pay it off altogether. Imagine the freedom! Because the sooner you can pay off your mortgage, the easier it should be to handle the other bills that come with being a grown-up, right?

Well, you might be surprised to learn that shaving months—or even years—off your mortgage early is not always the best choice for everyone. It sounds crazy, but bear with us. The experts we spoke with explained the benefits and disadvantages of paying off your mortgage in full before the end date.

Pros of paying off a mortgage early

If you can swing paying your mortgage off early, there can indeed be significant savings—literally thousands of dollars that stay in your pocket if you play your cards right. That's because paying your mortgage off early reduces your long-term interest costs, says Dan Green, founder of financial education site Growella.

It's also good for your overall credit to show that you have less debt, and that you have the ability to manage it responsibly, even paying debt off before it's due in full.

But paying off your mortgage early can also have its drawbacks

Cons of paying off a mortgage early

Many financial advisers are against paying off a mortgage early. Why? For one, you won't be able to take advantage of mortgage interest deductions, or the tax write-off you get from paying interest on your mortgage.

Because interest is what you're cutting by paying a mortgage early, you're also losing some of that benefit, says Chris Meyer, the co-founder and CEO of the loan aggregating website Magilla Loans. 'You will not be able to take mortgage tax write-off to its fullest extent,' he says.

Another disadvantage of shoveling money into your mortgage is that the money will be become 'illiquid,' Green warns, 'which means that the cash you put toward your home can't be reaccessed in an emergency.'

How to pay off your mortgage early

If you've weighed the benefits and disadvantages and actually want to get moving, Meyer offers these tips to actually make it happen:

  • Make a payment at the end of year once you see what extra cash you have. Specifically make the payment to the principal so it reduces the amount of interest you will pay in the future.
  • Make an extra payment monthly in a separate check citing 'principle' in the memo line.
  • Make one-thirtieth of the payment every day to make certain no interest ever accrues.
  • If you have mortgage insurance, track your loan-to-value ratio on the house and refinance once you hit 85% LTV. This could mean hundreds in savings each month which can be applied to the principle balance rather than the bank's insurance.
 

Source Realtor.com

 
Blog Archive
2018-12-05 08:02:12
In 2019 Mortgage Payments to Jump 8.4%

2018-12-04 05:56:21
Financing for Manufactured Homes Coming

2018-12-03 07:16:21
Tale of Dual Markets

2018-12-01 08:01:47
Need to Sell Your Home this Winter?

2018-11-30 07:43:20
Buyers Pull Away From New-Home Market

2018-11-29 07:45:39
Mortgage Loan Limits to Rise in 2019

2018-11-28 07:42:53
Home Buyers and Sellers Should Watch in 2019

2018-11-27 07:10:44
Townhouse Construction is Expected to Increase

2018-11-26 07:55:12
Cities With Oldest, Youngest Homeowners

2018-11-24 08:24:08
Overall, December is the Best Time to Buy a Home

2018-11-23 07:29:39
Sluggish Home Sales came to an end in October

2018-11-23 06:43:53
Happy Thanksgiving

2018-11-20 09:19:16
How to Pet-Proof Your House for the Holiday Guests

2018-11-19 07:08:54
10 Great U.S. Ski Towns

2018-11-17 07:12:02
A Way to Keep Aging Parents Close to Home

2018-11-16 07:58:33
Huge Mistake to Take Your Home Off the Market for the Holidays

2018-11-15 07:55:35
Best Mortgage Advice I've Heard, Ever

2018-11-14 07:31:18
Tips to Help You Avoid a Rental Scam

2018-11-12 07:15:39
Buying a Home?

2018-11-10 06:03:39
Mortgage Rates Rise this Week

2018-11-09 07:36:01
Cheaper the Home

2018-11-08 05:56:20
Building Credit History From Scratch

2018-11-07 06:25:07
How to Get a Mortgage Without Freaking Out

2018-11-05 06:42:51
Home Prices Are Decelerating Not Falling

2018-11-03 08:09:28
First-time Homebuyers Transition from Renting

Click here to see ALL articles.


Comment on this Article

Your Name:
Your Email:
Comments:
Verify:  Please enter the numbers shown to help eliminate spam.