Mortgage rates have dropped considerably in recent weeks, and when reviewing their financing options, some borrowers have chosen to refinance their mortgage. Refinancing a mortgage refers to paying off an existing mortgage and replacing it with a new one. Homeowners choose this strategy for a range of reasons, the most common being:
• lowering one’s monthly payment to improve cash flow or free up money for rainy day savings
• consolidating high-cost consumer debt, such as credit cards, car loans or other personal loans,
• renovating one’s residence while taking advantage of the new federal home tax credit,
• setting up a home equity line of credit.
A key element in evaluating any refinancing option is calculating the prepayment penalty that may be imposed by your current lender. Most mortgages contain a clause that obliges the borrower to pay a penalty if they pay off their mortgage in full before the maturity date. This penalty is usually based on the remaining term on the mortgage, as well as a calculation of the differential between the rate being paid and that lender’s current mortgage rate offerings.
Refinancing is a strategic financial decision that requires the assistance of a mortgage expert to get you the best deal from the many options available.
Turn to your Mortgage Direct2u Invis mortgage professional for advice on what penalties you may incur and if refinancing is indeed your best strategy. He or she has access to a full range of lenders and can guide you to the mortgage solution that suits your individual needs.
Wednesday, February 25, 2009
Tuesday, February 3, 2009
Tips for Paying Off Your Mortgage Faster
Last week we noted that homeowners have much to gain by paying off their mortgage as quickly as possible. By paying down extra principal in the early years of a mortgage, you can dramatically lower the interest you’ll pay throughout the life of the mortgage. Here are some additional tips on how to make this happen:
5. Make use of double-up privileges wherever possible Tell yourself that you will "skip-a-payment" whenever necessary... then skip only when you absolutely must.
6. Round your payments up By adding even a nominal amount of say, $10 per payment, the amount of interest you are saving will be unbelievable, and the extra money is relatively painless to part with.
7. Pay a lump sum whenever possible By decreasing the principal of the mortgage, your payments will not be allocated as much to interest, thereby accelerating the end of your mortgage.
8. Keep payments the same when mortgage rates have fallen If the payment amount has not been a problem so far, then keep it the same, thereby paying down the principal faster.
9. Raise payments in line with increased income on an after-tax basis If your income increases, don't keep your mortgage payments the same. Although the disposable income may be fun to spend on unnecessary luxuries in the short-term, the long-term benefits of being mortgage free faster a far outweighs the short-term sacrifice.
5. Make use of double-up privileges wherever possible Tell yourself that you will "skip-a-payment" whenever necessary... then skip only when you absolutely must.
6. Round your payments up By adding even a nominal amount of say, $10 per payment, the amount of interest you are saving will be unbelievable, and the extra money is relatively painless to part with.
7. Pay a lump sum whenever possible By decreasing the principal of the mortgage, your payments will not be allocated as much to interest, thereby accelerating the end of your mortgage.
8. Keep payments the same when mortgage rates have fallen If the payment amount has not been a problem so far, then keep it the same, thereby paying down the principal faster.
9. Raise payments in line with increased income on an after-tax basis If your income increases, don't keep your mortgage payments the same. Although the disposable income may be fun to spend on unnecessary luxuries in the short-term, the long-term benefits of being mortgage free faster a far outweighs the short-term sacrifice.
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