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If these ideas appeal to you, you may want to consider a faster pay down of your mortgage. Here are a few strategies for paying down a mortgage 1,2.
Borrowers making an extra payment should request that the extra payment is applied to the principal of the loan, rather than be applied to regular monthly payments due in the future. It’s also important to check to make sure there is no penalty for making prepayments on your mortgage.
A faster mortgage pay down is not for everyone. Because the interest paid on a mortgage is typically tax deductible, a faster pay down can impact a borrower’s income taxes. Also, the money used to pay down a mortgage may or may not be the best use of the money. For example, paying down 16% APR interest on credit cards may be a wiser than paying down a mortgage at 4.5% APR.
Before putting any strategies into practice, it’s a good idea to consult with your tax professional and/or financial advisor.
Another strategy that may be worth considering is refinancing an existing a 30-year loan to a 15-year loan 3. The wisdom of pursuing this option is highly dependent on unique circumstances. It may or may not make sense for you. A Stearns Mortgage Loan Originator can discuss your existing loan, your personal finances and present refinancing scenarios, when appropriate.
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