Benefits of Paying Off Your Mortgage Early
You love your home and enjoy the time you spend there with your family. Whether you are a new homeowner or have lived in your house or condominium for several years, you have probably thought about how much remaining debt you have compared with the equity you have already built in your home.
Paying off your mortgage early is a great way to lessen your financial burden, especially if you have the means to do so.
There are a number of variables to consider before paying extra on a mortgage or paying it off all together, which we will discuss below.
However, here are a few common advantages to making the decision:
- You can save on long-term interest payments.
- You are able to have a more fluid monthly cash flow.
- You can use additional cash wisely, as you have properly planned your portfolio so you don’t delineate from investments, emergency funds, retirement, or other financial needs.
- You are able to build enough equity to stop paying private mortgage insurance (PMI).
It’s always best to consult with a financial professional who will assist you with making the best determination for your family. However, paying off your mortgage can often help you improve your financial situation.
Let’s take a look at some of the many ways you can accelerate your mortgage payments in order to save more and spend less over time.
How Paying Extra on Your Mortgage Can Reduce Long Term Costs
In many cases, the more you pay toward your monthly mortgage payment, the less you’ll owe over the life of the loan. This is especially true the earlier you start.
Mortgage payments are categorized by principal amount (your original loan amount), and the interest percentage attached.
Mortgages also have an amortization schedule with a large percentage of initial payments going toward the interest. By paying more toward your principal balance each month, you can actually shorten the life of your mortgage and reduce the total amount of interest you’ll pay.
Some tips to accelerate your payments by paying extra on your mortgage include:
- Making payments bi-weekly (or doubling your current payment amount).
- Allocating extra to your principal.
- Submitting an additional payment at the end or beginning of each year.
Before making the decision, you’ll want to consider some variables. If you are able to answer yes to these questions, paying extra on your mortgage should be a possibility:
- Can I afford extra and/or restructured monthly payments?
- Can I reasonably predict I’ll save more with an expected rate of return (interest rate) vs. using it for investments?
- Am I choosing a mortgage with a lender who won’t charge me a pre-payment penalty?
With the right mortgage partner and the correct circumstances, paying off your mortgage early makes sense.
When you choose to pay more toward your mortgage and eventually eliminate it entirely, you’re giving yourself peace of mind that you can spend your money on other expenses without worrying about a monthly payment. You can also use the equity of your home if you eventually need money for skilled care or other financial circumstances.
Choose a Mortgage Refinance for Your Florida Home
The best way to save over the long term is with a low-interest refinance option from a qualified lender.
With less interest and a shorter term, you’ll have the opportunity to save thousands of dollars and be finished with your mortgage payments years early.
Picture this scenario:
You have a monthly payment of $955. You’ve borrowed $200,000 on your loan with an interest rate of 4% and a 30-year mortgage period. While your loan amount is $200,000, you’re actually repaying thousands of dollars more, as your principal payment and interest payment are combined for your total payment. Under your current mortgage, you’ll pay $143,739 in interest alone by the time the mortgage is paid off!
What if you paid more toward your principal and received a better rate with a shorter loan term? Consider a mortgage refinance for your Florida home.
For example, with a 15 year-mortgage period and an interest rate of 3%, you’ll make a monthly payment of $1,381 and pay only $48,609 in interest.
Find a mortgage that works for you. Flexible term, adjustable rate mortgages, and more are available options.
Refinance and Receive the Best Mortgage Rate
For the best financial value, choose a mortgage refinance for your Florida residence with assistance from the financial experts at TheBestMortgageRate.com, Florida’s premier online mortgage lender.
Our team works directly with well-qualified buyers to earn the best mortgage rates available and we can help you with an unmatched rate to save and pay off your mortgage in no time. Our lenders are ready to help you get started. Apply now to refinance today.