Having your own home has its financial perks, but it also means monthly mortgage payments in Hudson and Stillwater. Keeping up with paying them, along with your monthly expense budget, can be financially stressful sometimes. Making an extra mortgage payment to a bank in Stillwater, MN, and Hudson, WI, can help you in several ways. It enables you to save substantially in interest and eliminates debts providing flexibility in your life.
Reasons
To Make Extra Mortgage Payments
● Saving on Interest
The
extra mortgage payments go towards your principal loan balance. It lowers the
amount of interest added to the monthly mortgage
loan in Stillwater and Hudson. By the time your loan payoff
time arrives, you can see you saved tens of thousands of dollars in interest.
● Build Equity Faster
When
your principal loan reduces, it builds your equity faster, considering your
home value does not fall. You get rid of that added monthly obligation with one
extra mortgage payment and build your equity, increasing your home value. It
means you can get higher profits from the sale of your home now. It also
provides a better option for future home improvement loans.
● Early Payoff
One
extra mortgage payment allows you to pay off your home loan 3-4 years early.
You can be debt-free faster and go into retirement on a fixed income or start a
business without worrying about monthly payments.
How much
you can save with one extra mortgage payment?
Let's
take an example to understand it. Say you took a $200,000 30-year fixed-rate
loan at 4.1% from your bank in Stillwater, MN, or Hudson, WI. It means you have to make
monthly mortgage payments of $966.40.
● Interest Saving
For
the tenure of your loan period, you pay nearly $148,000 in interest costs apart
from the $200,000 as principal loan. When you take one extra mortgage and pay
$100 per month more, you can save approximately $28,000 in interest costs.
●
Building equity
Even if you do not stay in the same home for 25-years, the 25-year habit of paying extra, apart from saving on interest, allows you to have money to invest in a second property.
●
Early Payoff - Investment Benefit
The
additional $100 per month payment also helps you pay off your loan early by
5-years. It gives you the freedom to direct your funds for other investments or
goals in your life.
Ways
to Make One Extra Mortgage Payment
● One Lump-sum Payment
You
save money throughout the year to equal one extra mortgage payment like - you
pay 13 payments instead of 12-standard monthly payments. Then instruct your bank in Stillwater, MN, or Hudson,
WI, to balance it against your principal amount.
● Extra Dollars in Monthly Payment
You
can divide your one extra mortgage payment amount by 12 and add it to your
monthly payment. Your bank in Stillwater, MN, or Hudson, WI, uses the additional amount for the principal loan
balance.
● Bi-Weekly Payments
You
divide your monthly mortgage payments in Stillwater and Hudson in half and pay
it every other week. At the end of the year, it will leave you with an extra
mortgage payment to balance against your principal loan.
Conclusion
Making
extra mortgage payments reduces
interest costs, lowers debt, and saves thousands of dollars over your loan
period in Stillwater and Hudson. But be sure to check with your
mortgage lender about prepayment penalties and other complications before you
go ahead with the plan.
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