18
Sep
By Fred Gruber
Mortgage

Deciding Whether to Pay Extra Toward Principal or Save for Other Investments

When it comes to managing your mortgage, one of the most common questions is whether to put extra money toward paying down the loan principal or to save that money for other investments. Both choices have advantages, and the right decision often depends on your goals, financial situation, and comfort with risk.

The Case for Paying Extra Toward Principal

Making additional payments directly to your mortgage principal reduces the amount of interest you pay over the life of the loan. Even small extra payments can shorten your mortgage term and save thousands of dollars on interest. For many homeowners, this approach provides peace of mind and a guaranteed return, since reducing debt always improves financial security.

The Benefit of Saving for Other Investments

On the other hand, investing outside of your mortgage may allow your money to grow at a higher rate than your mortgage interest. Retirement accounts, stock market investments, or even building an emergency fund can offer greater flexibility and potential for long term wealth. For borrowers with low interest rates, the opportunity cost of tying up money in the mortgage may outweigh the guaranteed savings.

Balancing Both Approaches

For many families, the best option is not an either-or choice but a balance. Contributing some extra funds toward the mortgage while still investing in retirement accounts or savings goals can provide both security and growth. This blended approach allows you to reduce debt while also building wealth for the future.

Deciding between paying extra toward your mortgage or saving for investments comes down to priorities. If you value financial certainty and want to become debt free sooner, paying extra toward the principal may be best. If you are focused on long term growth and maximizing returns, investing may be the smarter move. In many cases, combining the two strategies can give you the best of both worlds.

17
Sep
By Fred Gruber
Mortgage

How Borrowers Can Benefit from Inflation with the Right Mortgage

Inflation is a topic that impacts nearly every part of the economy, from the cost of groceries to long term financial planning. For homeowners and those considering a mortgage, inflation can feel intimidating. However, with the right perspective and strategies, borrowers can use inflation to their advantage and create lasting financial benefits.

Understanding the Relationship Between Mortgages and Inflation

Inflation reduces the purchasing power of money over time. While this can make everyday expenses higher, it also works in favor of borrowers with fixed rate mortgages. Since the mortgage payment stays the same each month, the real value of that payment decreases as wages and prices rise. In other words, the loan feels more affordable as time passes.

The Benefit of Fixed Rate Mortgages

One of the clearest ways to benefit from inflation is by choosing a fixed rate mortgage. Unlike adjustable-rate loans, fixed rate options lock in the interest rate for the entire term. As inflation increases, homeowners with fixed mortgages enjoy stable payments while renters often face rising rents. Over the years, this stability can free up more of the household budget for savings, education, or other investments.

Building Equity Faster

Inflation can also accelerate the growth of home equity. As home values rise along with inflation, homeowners often see their property appreciate. While the mortgage balance gradually decreases with each payment, the value of the asset typically grows, creating a stronger financial position. For families, this can mean greater security and more options for the future.

Protecting Long Term Wealth

Real estate has long been considered a hedge against inflation. By owning a home with a stable mortgage, borrowers can protect themselves from some of the challenges that rising costs bring. Monthly payments remain consistent, while the property itself may increase in value over time, helping homeowners preserve and even grow their wealth.

Inflation can create challenges in daily life, but it also presents an opportunity for homeowners. By securing a fixed rate mortgage and thinking long term, borrowers can position themselves to benefit as inflation reduces the real cost of their loan and increases the value of their property.

11
Sep
By Fred Gruber
Mortgage

5 Key Steps in the Mortgage Underwriting Process

Buying a home can be exciting, but it can also feel overwhelming. Understanding the mortgage underwriting process can make things a lot smoother! 

What is Underwriting?
Underwriting is when lenders review your financial information to determine if you qualify for a mortgage. They check your income, assets, credit history, and the property itself to assess risk.

The 5 Key Steps

  1. Submit Your Application
    Pre-approval starts here! This tells you and your lender how much you can afford and saves time while looking for a home.
  2. Verify Income and Assets
    Provide documents like pay stubs, tax returns, bank statements, and ID. Lenders check your debt-to-income ratio and credit history to make sure you can handle the mortgage.
  3. Property Appraisal
    A professional appraisal ensures the homeís value matches the price. Condition, features, and comparable sales are all considered.
  4. Title Search and Insurance
    A title company verifies that the home is free of legal issues and provides insurance to protect both you and the lender.
  5. Underwriter’s Decision
    Decisions can be:
    • Approved – You’re ready to close!
    • Suspended – More info or documents are needed.
    • Denied – Additional steps are required to improve your eligibility.

After Underwriting
Once approved, youíre on track for closing! The process can take a few days to a few weeks, depending on your file and the property.

Understanding underwriting helps reduce surprises and makes your homebuying experience smoother. Knowledge is power when it comes to your biggest investment!