More than 20 million Americans own their homes outright. Some bought their homes with cash while others whittled away at their mortgages year after year until they were gone.
That leaves about two-thirds of the nation’s homeowners with the goal of one day making that last mortgage payment. Since we’re all about getting out of debt as quickly as possible, here are a few suggestions to get your home loan paid off quickly.
Each time you pay extra on your mortgage, more of each payment after that is applied to your principal balance. Here are some options for paying extra and examples of how extra payments will affect the average $220,000, 30-year mortgage with a 4% interest rate:
– Make an extra house payment each quarter, and you’ll save $65,000 in interest and pay off your loan 11 years early.
– Divide your payment by 12 and add that amount to each monthly payment, or pay half of your payment every two weeks, also known as bi-weekly payments. You’ll make one extra payment each year, saving you $24,000 and shaving four years off your mortgage.
– Round up your payments so you’re paying at least a few extra dollars a month.
– Increase your payment when you get a raise or bonus.
Always check with your mortgage company before you make additional principal payments. Some companies will only accept extra payments at specific times or they may charge prepayment penalties. And always make sure the additional money is applied to the principal and not next month’s payment.
The only type of debt Dave won’t yell at you about is a fixed rate 15-year mortgage with a payment that’s no more than 25% of your take-home pay. You’ll pay much more in interest on a 30-year mortgage and, besides, who wants to be in debt for 30 years?
You can refinance a longer term mortgage into a 15-year loan. Or, if you already have a low interest rate, save on the closing costs of a refinance and simply pay on your 30-year mortgage like it’s a 15-year mortgage. The same goes for a 15-year mortgage. If you can swing it, why not increase your payments to pay it off in 10 years?
Using the same stats above for the average mortgage with a 15-year term, you’d need to bump up your monthly payment to about $2,200 to pay off your loan in 10 years. You’ll save $25,000 in interest, but best of all, you’ll be out of debt five years sooner and have $2,200 a month to invest for retirement, save for college, or give away!
This could be a drastic step, but if you’re set on getting rid of your mortgage, consider selling your larger home and using the profit to buy a smaller, less expensive home.
With the profits from your home sale, you may be able to pay all cash for your new home, but even if you have to get a small mortgage, you’ve succeeded in reducing your debt. Now your goal is to get rid of it as quickly as possible. The smaller the balance, the quicker you can make it happen.
If you’re looking to buy a home that fits your budget, consult an experienced real estate agent whose advice will save you time and money. Contact your agent today!
If you’re wondering whether this summer is a smart time to buy a home, then let me cut to the chase. Thanks to still-historically low mortgage rates, housing may never again be as affordable as it is right now.
At present, the interest rate on a 30-year fixed rate mortgage is 4.19%. That’s the cheapest they’ve been all year, and they even recently dipped below half the long-run average of 8.52%. A historic opportunity for homebuyers Just to be clear, mortgage rates like this are not only extremely low; they’re also phenomenally rare.
Dreaming up creative, do-it-yourself painting projects for your home — or wanting to replicate ideas you saw on Pinterest or elsewhere — is one thing. Actually doing them with not-horrible results? Another thing entirely.
Welcome to summer, parents and teachers…WE MADE IT. Hallelujah, and cheers!
The children have been educated another year, and we all deserve prizes. Somewhere left of a rigorous schedule that kills joy but right of unstructured anarchy is my zip code. In no order, here are 10 things to do with your kids this summer.
A recent study revealed that the number of existing home owners planning to buy a home this year is about to increase dramatically. Some are moving up, some are downsizing and others are making a lateral move.
Another study shows that over 75% of these buyers will, in fact, be in that first category: a move-up buyer.
We want to address this group of buyers in today’s blog post. There is no way for us to predict the future but we can look at what happened over the last year.
Seventy-five percent of the home owners surveyed say they believe a room or area needs paint.
What’s more, one in five home owners say they prefer a colorful paint palette, such as rich and dark or bold and bright.
Moving brings great opportunities in the form of careers, social connections and new beginnings. However, the act of moving can create unnecessary stress. About 35 percent of Americans move every five years, according to the U.S. Census Bureau, which results in many people who are looking to simplify the process and turn their new house into a home.
• Review everything being packed: If you have items you won’t use or haven’t used in six months, put them aside. They are good candidates for selling at a garage sale, listing in online classified ads, donating to charity, or as a last-case scenario, throwing away.
Also, look for ways to reduce your load. Canned goods may still have shelf life, but evaluate whether it makes sense to move or donate – it’s likely the latter. The same goes for other items you can easily and inexpensively purchase at a discount store when you arrive at your destination. As you approach moving day, be sure to think twice before loading up at grocery or convenience stores.
As you take inventory of everything in your home, be sure to clean, organize and sort the remaining items so they can be packed quickly and then easily found when you arrive at your new home.
• Get secured before you move: Feeling secure and in control is an important part of transforming a new house into a home. An ADT Pulse home security and automation system gives homeowners the ability to not only monitor their home’s security, but also control functions such as adjusting lights, unlocking doors and controlling thermostats – all with the touch of an app. Plus, it can start working for new homeowners on day one, whether using it to grant access to trusted contractors and technicians or receiving alerts when deliveries arrive at the front door. In a new neighborhood and a new house, it will be a sigh of relief to know you’re in control both at home and while away.
• Keep organized on moving day: Walk through the old home with your movers to identify how you’d like your items organized and packed. Let them know you want the house packed room by room, which will make it easier to unpack and place everything into your new house. If you have anything fragile, be sure to note how you’d like those items to be handled, saving you plenty of time and headaches in the long run.
If you’re planning to move yourself, it’s important to take precautions and protect your belongings while the truck is being loaded and unloaded. Have a team of trusted friends or family help you – the more sets of eyes, the easier it will be to keep track of your belongings. If you need to keep the truck parked overnight, back the vehicle up to a wall or garage door, which will make it difficult for someone to break in.
• Make yourself a happy place: Choose one room in your new home to be the room you completely unpack and organize on the first day. This gives you a restful sanctuary where you can retreat, even if the rest of your items are still in boxes scattered among the other rooms for several days to come.
• Document and share the transformation: Use your smartphone or camera to document the change of your new home as your items are unpacked and placed. This allows you to see how your hard work has paid off.
With these tips, you can streamline your move and make it less stressful for you and your family.