How Long Will it Take to Pay Off My Mortgage?
Like purchasing a vehicle or paying back your student loan there is always a designated time of when the loan repayment must be made. Most home loans are paid back within 30 years; anything that is longer than this time frame is not considered a home payment. Along the way a lot of people run into to problems, such as their home loan being too expensive, or their interest rates are too high. When you find that you are paying too much for your home and could have the possibility to pay a much cheaper interest rate a lot of people refinance their homes. The refinancing process is similar to consolidating your debt, only reverse. Instead of making higher payments to get ride of your debt, you extend your loan length making your payments lower. Refinancing lowers your monthly payments; however it extends the year term on your loan as well. Therefore, when you actually finish purchasing your home you pay a lot more then a normal individual would because you are paying a lot higher interest.
Lengths of Mortgages
Deciding on how many years to pay back your mortgage can be a very important piece to the financial puzzle. The longer the term the more money you will end up paying in interest. It is important that if you have a 30 year mortgage then you want the interest rate to be as low as possible. A higher interest rate could mean thousands of dollars extra a year towards the interest and not towards the principle. If you have the ability to pay your mortgage off sooner then it might be a better option to have a mortgage for 5 or 10 years. Paying a mortgage off in fewer years will save you a few hundred thousand dollars. Having the option of how long you want your mortgage for is very important. If you plan of keeping your house for a long time then a long mortgage would be better, but if you want to sell it in a few years then it might not be worth it to take out a 30 year mortgage.
Getting the Right Mortgage
Finding the right funding for your mortgage is important. How much? How long? Where to finance? These are all important questions that you need to ask yourself before you get your mortgage. Before you dive into a financial commitment you should see how much you can afford a month before taking on new bills. A lot of mortgage companies will be able to help you figure out how much you can afford to dish out every month. Is can set you on the right track when deciding on what mortgage might actually be best for you. You should also be aware that the larger down payment you can come up with then the less money you will have to pay for a mortgage and this can lower the amount of interest that you will have to pay towards the loan.
Paying Off Your Mortgage
Paying off a mortgage can take time and money. Over the course of a mortgage you will see the principle amount decrease as time goes on and monthly payments are made. The interest that is associated with a mortgage can add up over time to more then the amount of the original loan. If you come into some extra funds then it might be well worth it to apply them to the mortgage driving down the amount or even paying it off. Paying off your mortgage early can be a very good thing. Depending on your mortgage agreement you might face a penalty for an early payoff, but you will no longer have to worry about those monthly payments plus you own the house.
Refinancing a Mortgage
Another option one has is to refinance their mortgage. Refinancing a mortgage will not shorten the term of your loan, but it will lower your monthly payments. Since with refinancing you are now changing your loan to what is left on the original mortgage the amount of money lowers and you can also get a lower interest rate if you plan it right. Having a lower interest rate can help you reduce the monthly payments on your loan. The only downfall to refinancing is that now you will have the loan for a longer amount of time causing you to pay more years and taking longer to pay off.
