What Are The Benefits Of Pre-paying Your Mortgage!

With more and more people looking to retire earlier then ever before repaying your mortgage sooner is also in the front of everyone’s minds so they can enjoy retirement and have a little extra cash flow. Some people can see these benefits of paying off your mortgage faster and others it takes a little more convincing to get them to see the true benefits of it.

The first benefit would be that you would be saving a lot of money in interest. For example if you had a $100,000 mortgage with an average interest rate of 6% with an amortization of 25 years you would pay around $93,000 in interest over the 25 years which is almost double the initial amount of the mortgage.

How good would you feel knowing you no longer have to worry if you have enough money in the bank to make your next mortgage payment? You might even be able to take a lower paying job and not have to worry as much.

Although some people will argue that investing the money you would use to make the extra mortgage payments will make you more money in the long run there is always the chance that you will not make any money or you could even lose some.

Think about this most people do not buy a house to make money they buy it to live in and since you can not live in a mutual fund, buying a house with the possibility of making some money to afford a new house when you family grows out of the house you are in would make more sense to many people.

• Plan before you buy- determine how much house you can afford to buy and then buy a house that is a little less then your maximum that way you will have some room incase something happens financially to your family.

• If you receive a raise or bonus at work take that money and apply it to your mortgage, you will not miss it as you were living fine without it.

• Watch the mortgage rates and if they drop you might want to consider refinancing to take advantage of the lower interest rate.

• You may also want to consider paying your mortgage accelerated bi-weekly as you will end up making one extra monthly payment a year, as well as you pay more off your principle amount then if you were to only make 12 monthly mortgage payments.

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