23
Nov
By First Rate Financial Group
Home Mortgage Tips

What Are the Advantages to Paying off Your Mortgage Early? Here Are a Few That Might Entice You

If you're looking into fixed term mortgages, you might be wondering whether there's any reason why you should take the full term to pay off the loan. In a lot of cases, paying off a mortgage before it comes due is a great decision. If you're considering paying off your mortgage early, you'll experience a variety of benefits – here are just a few of them.If you’re looking into fixed term mortgages, you might be wondering whether there’s any reason why you should take the full term to pay off the loan. In a lot of cases, paying off a mortgage before it comes due is a great decision. If you’re considering paying off your mortgage early, you’ll experience a variety of benefits – here are just a few of them.

You’ll Save Thousands In Interest Payments

By and large, the single biggest advantage of paying off a mortgage early is the money you’ll save in interest. The longer you take to pay off your mortgage, the more you’ll pay in interest overall. In fact, on a 30-year fixed-rate mortgage, you’ll pay as much in interest as you do in principal over the course of the loan – but if you pay off a $300,000 mortgage five years early, you’ll save $60,000 in interest charges, assuming an interest rate of 5.5 percent.

You’ll Greatly Improve Your Credit Score

A mortgage is quite a sizeable debt, and the longer it takes you to pay off your mortgage, the longer it’ll weigh down your credit score. Paying off your mortgage early will boost your credit score quite substantially, which means you’ll be able to take out loans to buy an investment property and start earning income on a second home. And with your first mortgage paid off, you’ll have a significant amount of new money coming in.

You’ll Free Up Your Cash Flow

Once you’ve paid off your mortgage, you’ll free up a great deal of monthly income – which you can invest into mutual funds, a savings account, trips around the world, or a college fund for your children. With so much extra cash available every month, you’ll be able to save, invest, and spend more freely – and that means you’ll meet your financial objectives sooner.

Paying off a mortgage earlier than expected may seem like a daunting challenge, but with discipline and a solid plan in place, it’s very possible. And best of all, paying your mortgage off early offers a number of great advantages that extend beyond just the financial. It’ll offer a variety of lifestyle advantages and give you a great deal of financial freedom.

Want to learn more about how the mortgage process works, or discover great new strategies for paying off your mortgage sooner? Contact your local mortgage professional today to schedule a consultation.

19
Nov
By First Rate Financial Group
Home Mortgage Tips

How to Use a Mortgage Calculator to Determine Your Monthly Payments, Interest and More

How to Use a Mortgage Calculator to Determine Your Monthly Payments, Interest and MoreAre you thinking about using a mortgage to buy a new home? Buying your own piece of local real estate is a major financial investment and one that can require some pretty complex math to fully understand.

In this blog post we’ll discuss mortgage calculators and how to use one of these tools to determine your monthly mortgage payments, interest charges, amortization periods and more.

Determining Your Principal and Down Payment Amounts

To get started with a mortgage calculator you’ll need to know how the price of the home and how much you intend to contribute as a down payment. Generally speaking you’ll want to place a down payment of at least 20 percent in order to avoid having to pay for private mortgage insurance and to give you access to better interest rates.

Choosing Your Interest Rate and Amortization Period

Now that you have an idea of the amount of mortgage financing you’ll need, the next step is to choose your interest rate and amortization period. Different lenders will offer different interest rates for every one of their mortgage products, so again you’ll want to play around with these numbers and run the calculation to see which combination of mortgage financing, interest rate and amortization period gives you a monthly payment that suits your budget.

Using a Mortgage Calculator for Refinancing

If you’re thinking about refinancing your current mortgage you can also use a mortgage calculator to help make the math a bit easier. Simply use your outstanding mortgage balance as the principal amount and then choose an amortization schedule that fits your financial goals. Be sure to keep an eye on your interest payments, as you may find that by refinancing to a longer amortization period your monthly payments go down but your total interest paid is quite a bit higher.

Don’t Forget the Closing Costs

Finally, don’t forget that there are numerous “closing costs” – fees, taxes and more – which you’ll need to factor in to your overall calculation. Closing costs will include everything from home appraisal fees to government filing fees and property taxes, and will vary depending on the home and the city or community you’re buying in.

While online mortgage calculators can handle the tricky math to determine monthly payments and interest costs you may still find that you have questions about your mortgage or some aspect of the process. For more information, contact your local mortgage professional and they’ll be happy to share their advice and expertise.

17
Nov
By First Rate Financial Group
Home Mortgage Tips

Trying to Save on Your Closing Costs? Here Are Three Tips That Can Help Lower Them

Trying to Save on Your Closing Costs? Here Are Three Tips That Can Help Lower ThemWhether you’re about to close on a lovely new house for your growing family or a stylish beachfront condo so you can retire close to the ocean, one thing is certain: you’re going to face a variety of closing costs. Insurance, taxes, financing fees, title fees, attorney fees and other costs will need to be paid, and if you’re a savvy buyer you’ll do everything you can to save on them.

In today’s post we’ll share three quick tips that can help you reduce your closing costs when you buy your next home.

Tip #1: Include Closing Costs in Your Negotiations with the Seller

As closing costs are a part of the real estate transaction they’re an excellent item to include in your negotiations with the seller.

For example, if you consider that closing costs might be 3 or 4 percent of the home’s value you can try to bring the seller’s asking price down to get those costs included. Or, you may be able to entice the seller with the prospect of a quick sale if they are willing to pay your closing costs in order to get you to sign on the dotted line.

Tip #2: Compare All of Your Mortgage Options

If you’re using mortgage financing to cover some of the up-front purchase cost of your home you’ll have other closing costs to pay including lender fees, mortgage insurance and more. Be sure to compare all of your options with your trusted mortgage advisor to ensure that you’re getting the best possible deal and paying the least amount in fees and interest.

You may also be able to save a bit on your closing costs by choosing a “no points” mortgage. In this type of mortgage you’ll end up saving on closing costs but you’ll be left paying a higher interest rate. Spend a bit of time doing the math to determine the best course of action.

Tip #3: Ask About Every Fee You’re Required to Pay

Finally don’t forget that you’re the customer and that you have the right to know about each one of your closing costs and why you’re expected to pay them. Being informed about all of the various items in your transaction will help ensure that you’re not paying something you could have avoided.

There you have it – three excellent tips for reducing your closing costs when you purchase your next home. For more information and advice about mortgage closing costs and how to best manage them, be sure to get in touch with your local mortgage professional.