Ways of Paying Off Your Mortgage Loan Early
Most mortgage loans borrowers have 30 year fixed rate mortgage loans. 30 years is a lot of time to be stuck with a payment obligation and a lot of interest expense that you will end up paying. Your interest expenses will be more than your principal amount of your mortgage. If you are a homeowner there are ways of paying off your mortgage loan early.
Make Payments Early
All residential mortgage loans in California, Florida, and Illinois have no prepayment penalties. One way of saving a lot of money in mortgage interest expense and paying off your mortgage loan early is by making extra payments besides the minimum monthly mortgage loan amount due. The additional payment pays down the principal amount of the mortgage. Just by making an additional $200.00 monthly payment towards your principal reduction on a $400,000 mortgage loan with a 4.0% 30 year fixed rate will reduce your 30 year payment to 25 years. This will save you 5 years in paying off your mortgage loan early.
Make Bi-Weekly Payments is way of Paying Off Your Mortgage Loan Early
Another way of paying off your mortgage loan early is by making biweekly mortgage loan payments. By making biweekly mortgage loan payments, you are ahead by an extra month of paying your mortgage by the end of the year. Getting in the habit of making biweekly mortgage payments will reduce the term of your 30 year mortgage loan. If you get into a regiment in making biweekly mortgage payments, your new mortgage loan term will be 25.8 years on a $400,000 mortgage loan with a 4.0% mortgage rate on an original 30 year fixed rate mortgage loan. Making biweekly mortgage payments will help you paying off your mortgage loan early by almost 5 years, which mean thousands of dollars in mortgage interest expense savings.
Choose a Shorter Term
Another option in paying off your mortgage loan early is by getting a shorter amortized mortgage loan. By getting a shorter term mortgage loan will increase your minimum monthly mortgage payment obligations but if you can afford the extra payment, it can save you thousands over the life of the mortgage loans and help you in paying off your mortgage loan early. There are 25 year, 20 year, 15 year, and 10 year fixed rate mortgage loan programs. If you have any questions on the types of mortgage loan programs that is available in Illinois or Florida, please contact me at www.gustancho.com.
Pay Down With Lump Sums
If you have additional cash that is sitting just in your bank account not earning any interest income, you may consider paying down your mortgage loan. By making a one lump payment to reduce your principal will save you a lot of money in mortgage interest expense. Remember by doing this, your monthly payment will still stay the same unless you restructure your mortgage loan with your mortgage lender.
Refinance Your Current Mortgage Loan
Monitor the current mortgage rates. Maybe it might be beneficial for you to refinance your California, Illinois or Florida mortgage loan to reduce your monthly mortgage payment and save you thousands of dollars in mortgage interest expense over the life of the mortgage loan. If you need to explore the idea of refinancing in Illinois or Florida, please contact me for a free, no-obligation, consultation at www.gustancho.com .