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You might think those people who own houses saved up until it got to the right amount. Well, this might be possible, but it is difficult to achieve since the temptation to use the money and unforeseen expenses may arise. So how do most people acquire a house? In America today, the quickest path to homeownership is by a mortgage.
For clarity, a mortgage is a loan from a financial institution or lender that helps the borrower to buy a house. While taking a mortgage may seem like an excellent idea, like every debt, you would want to pay this mortgage off as promptly as possible. So if you are nursing the thought of a mortgage or you are finding it difficult to pay off your mortgage in this post, you will find tips you can use to take control of your money goals and pay off your house early. Here are six practical ways to get there faster:
Switch to Bi-Weekly Mortgage Payments
By dividing your monthly house payment in half and choosing to pay every two weeks, you can relieve yourself of financial stress in two ways. Firstly, this extends the cash flow demand required to pay your monthly bill and secondly, it will help slip an extra monthly-equivalent payment annually.
Refinance to a 15-year Mortgage
Another easy way to pay off your house in no time is to refinance your mortgage from the traditional 30-year mortgage to a 15-year term Doing this will offer you a lower interest rate as well as save you a significant amount of money in interest throughout your loan.
Pay extra each month
Adding $50 to your budget is not too much, but when you continuously add this amount or more to your mortgage payment, it can make a massive difference. Although it might look simple to do, it requires a lot of discipline and commitment.
Bring your lunch to work
Coming to work daily with a brown bag can do you more good other than filling your stomach. By packing a lunch instead of buying from restaurants, you save up a reasonable sum of money that you might put toward paying off your mortgage early.
Put your windfalls into your mortgage
Most taxpayers receive a tax refund each year. If you can utilize all or some of that money as a form of extra payment on your mortgage, you will make rapid progress in paying your house fast.
If you're looking to purchase a home and don't want a 30-year payment, consider these factors when determining how much house payment you can afford.
Filling out a mortgage application may prove to be a long, arduous process, particularly for those who are buying a house for the first time. Lucky for you, we're here to help you dot the I's and cross the T's on your mortgage application to ensure you can quickly and effortlessly acquire your dream house.
Now, let's take a look at three tips to help you prepare your mortgage application.
1. Be Diligent
A mortgage application may appear daunting at first. The application may include several pages of questions, and you may have only a limited amount of time to finalize your submission.
When it comes to completing a mortgage application, it generally pays to be diligent. If you answer each mortgage application question to the best of your ability, you likely will have no trouble moving forward with your home purchase.
2. Avoid Guessing
If you're uncertain about how to respond to certain mortgage application questions, there is no need to guess. Instead, search for the information that you need to provide a comprehensive response. This will help reduce the risk of encountering potential problems down the line that otherwise could slow down your home acquisition.
Remember, guessing on a mortgage application probably won't do you or your lender any favors. But if you allocate the necessary time and resources to understand mortgage application questions and provide thoughtful responses, you can minimize the risk of application errors.
3. Ask Questions
Completing a mortgage application sometimes can be tricky. Fortunately, a lender employs mortgage specialists who are happy to respond to your application concerns or questions at any time.
If you're unsure about information that is requested on a mortgage application, don't hesitate to reach out to a lender's mortgage specialists for help. These specialists possess extensive mortgage expertise and can help you complete a mortgage application.
Furthermore, mortgage specialists can offer insights into a wide array of mortgage options. These specialists can explain the differences between fixed- and adjustable-rate mortgages and enable you to select the right mortgage option based on your financial situation.
As you prepare to buy a house, you may want to consult with a real estate agent as well. In fact, with a real estate agent at your side, you can seamlessly navigate the homebuying process.
A real estate agent understands exactly what it takes to acquire a house, regardless of the finances at your disposal. This housing market professional can set up home showings, help you submit offers on houses and ensure you can purchase a residence that matches or exceeds your expectations. And if you need help getting a mortgage, a real estate agent may even be able to connect you with the top lenders in your city or town.
Ready to move forward in the homebuying journey? Use the aforementioned tips, and you can finalize a mortgage application and secure the financing that you need to acquire your ideal residence.
Lower mortgage rates make it feel sensible and smart to take out a second mortgage. Doing so, gives you more equity. It enlarges your real estate footprint. Unless you rent out upscale properties, places like beachfront houses and condos in a major metropolis, taking on more housing debt could set you back.
How you might open up and live after you put your mortgage behind you
It could leave you with no other choice except to work longer hours or take on another job to cover the second mortgage. You'd gain more property, another investment that could serve you financially in ways that you don't expect.
You'd also be missing out on a lot of freedom. There's so much to gain from a mortgage free life. Check this out. Pay off your mortgage and you could:
- Pick a spot on the map that you are excited about visiting and exploring, pack your bags and head off for that very place.
- Visit your adult children three to four times a year. Enjoy day trips in cities that your children reside in. It's a great way to get out, meet new people and learn.
- Return to school and get the graduate certificate, license or degree that you want.
- Cut back on the numbers of hours that you're working. Pull back on your overtime, potentially shifting your work hours downwards from maybe as many as 80 hours a week to 40 or fewer hours a week.
- Pursue your art. Go out and buy the art supplies that you need to launch your art career. Take to the road to tour and share your art with people who are looking for what it is that you create.
- Build a foundation, an avenue that you can use to support and strengthen others potentially for generations.
- Switch careers and finally start working the job that you love, the work that generates joy and peace from deep within you.
- Support other artists, students and people who are starting out in a career or pursuing an art or dream with the money that you once used to pay your mortgage.
- Gift friends and family with handmade items like cards, floral arrangements and decorative poetry.
Your house shouldn't hold you hostage
You don't buy a house to have something expensive to keep paying on for years. You buy a house to have a reliable place to live, a comfortable place that you can payoff and enjoy living without a mortgage or rent. There's so much that you can do after you pay off your mortgage.
Instead of working to pay down your largest expense, you can use your income to travel. You can build your retirement savings or invest in your foundation. You can explore hobbies and talents that you've been putting off using since you were a kid. In a nutshell, after you pay off your mortgage, you can enjoy rewarding changes that have rich short and long term effects.
Whether you’re a first time homebuyer or a seasoned homeowner, the terminology of mortgages can be confusing. Since buying a home is such a huge financial decision, you’re also going to want to make sure you understand every step of the process and all of the conditions and fees along the way.
In this article, we’re going to explain some of the common terms you might come across when applying for a home loan, be it online or over the phone. By learning the basic meaning of these terms you’ll feel more confident and prepared going into the application process.
We’ll cover the acronyms, like APRs and ARMs, and the scary sounding terms like “amortization” so that you know everything you need to about the terminology of home loans.
ARM and FRM, or adjustable rate vs fixed rate mortgages. Lenders make their money by charging you interest on your home loan that you pay back over the length of your loan period. Adjustable rate mortgages or ARMs are loans that have interest rates which change over the lifespan of your loan. You may start off at a low, “introductory rate” and later start paying higher amounts depending on the predetermined rate index. Fixed rate mortgages, on the other hand, remain at the same rate throughout the life of the loan. However, refinancing on your loan allows you to receive a different interest rate later down the road.
Amortization. It sounds like a medieval torture technique, but in reality amortization is the process of making your life easier by setting up a fixed repayment schedule. This schedule includes both the interest and the principal loan balance, allowing you to understand how long and how much money will go toward repaying your mortgage.
Equity. Simply state, your equity is the the amount of the home you have paid off. In a sense, it’s the amount of the home that you really own. Your equity increases as you make payments, and having equity can help you buy a new home, or see a return on investment with your current home if the home increases in value.
Assumption and assumability. It isn’t the title of a Jane Austen novel. It’s all about the process of a mortgage changing hands. An assumable mortgage can be transferred to a new buyer, and assumption is the actual transfer of the loan. Assuming a loan can be financially beneficial if the home as increased in value since the mortgage was created.
Escrow. There are a lot of legal implications that come along with buying a home. An escrow is designed to make sure the loan process runs smoothly. It acts as a holding tank for your documents, payments, as well as property taxes and insurance. An escrow performs an important function in the home buying process, and, as a result, charges you a percentage of the home for its services.
Origination fee. Basically a fancy way of saying “processing fee,” the origination covers the cost of processing your mortgage application. It’s one of the many “closing costs” you’ll encounter when buying a home and accounts for all of the legwork your loan officer does to make your mortgage a reality--running credit reports, reviewing income history, and so on.