Tips For Achieving Extra Mortgage Payment A Year
One way that you can lower your payments and save money is to pay off two extra mortgage payment every year before you buy your home. When you get an adjustable rate mortgage, it can be very tempting to go with a high interest rate. It is possible, of course, to get a better mortgage rate if you use the time to study loan offers and secure the lowest rates. In fact, many homeowners choose to refinance rather than accept a high interest rate when refinancing.
By paying off two extra mortgage payment each year, you will be able to lower your interest rate considerably and save a significant amount of money. In addition, paying off mortgage early can help you avoid extra mortgage insurance premiums. There are several benefits to paying off mortgages early, especially for people who are in the “on the road to homeownership.” Some of these benefits include; avoiding property taxes, insurance premiums and homeowner association fees.
Credit score is a number used by lenders to determine your ability to repay loans and how much you should pay monthly. The higher your credit score, the less risk you represent to them. Therefore, by paying off your mortgage early it can improve your credit score and give you the opportunity to borrow more money or qualify for a better loan. When you pay off your mortgage early it shows your lenders that you are serious about being a mortgage holder and your credit score will reflect this.
Having delinquent credit can negatively impact your credit score. If you are able to clear off your mortgage early, it helps you lower your chances of having other late payments and higher finance charges. This can make refinancing or other home equity loans easier.
The second thing you can do to save money on your mortgage is to make sure you pay off any outstanding debt before you move on to the next mortgage. Many lenders will charge a fee if you put off paying off your mortgage. It can cost you as much as two points on your interest rate. To avoid paying extra money each month, make sure you clear your mortgage before moving on to another loan. This includes credit cards, utility bills and personal loans.
One more way to save on your mortgage early payoff is to apply for and secure a secured credit line before you refinance. Most lenders will approve you for this type of line once you prove that you have been making on time payments for the past year or so. Once you have a credit line approved, you can then move onto the application for a mortgage with your new line of credit. Not only does this improve your credit score, it also gives you a chance to build up your savings that will allow you to make larger payments in the future when you decide to take out a larger loan.
If you want to save on your mortgage early, remember to check into the possibility of getting a cash out refinancing. When you refinance your current mortgage, you end up paying closing costs along with commission fees to your existing lender. For most people this isn’t worth it as they are already swimming in debt. On the other hand, you can get cash out refinanced without any of those costs by using an online lending site. You will be required to give the lender access to information about your past home payments and your current financial situation in order to give them your quote; however, many will actually offer to give you a cash out refinance quote without ever contacting you.
Another way to save on your mortgage is to pay off any existing loans you have before you move on to the next mortgage. Most lenders will allow you to take out a second mortgage or a home equity line of credit on your property. Even if you don’t qualify for these loans, there’s no harm in taking them out. By paying off these debts you will free up some money to apply towards making that extra 2 extra mortgage payment a year. You can also use the funds from these loans to build equity in your home.