Profitt Report: How do you pay off your house early?
Between credit cards, student loans and your house payments, it’s natural to want to dig out of that debt and your biggest burden might be your mortgage.
“We want to make sure there's a good balance,” said Mindy McIntosh, financial professional at McIntosh & Associates in Freeland.
“Yes, we want to make sure you're paying down that mortgage but we don't necessarily want to say, pay off all of that mortgage,” she said.
Here’s McIntosh’s thinking: if you’re throwing so much money at your mortgage and neglecting an emergency fund or retirement, you’re out of balance.
However, it might make sense for some people to pay off their house early.
“We’re seeing where clients can, if their bank allows them to, do a payment every two weeks. That way, they get an extra month payment at the end of the term,” she said.
If you pay half of your mortgage every other week, that’s 26 half payments a year, or 13 full payments, instead of the usual 12.
“They just want to make sure they specify they want that additional premium payment to go towards their principle,” she said.
Some lenders offer bi-weekly payments and some do not. Others allow them but require a fee to initiate a biweekly plan.
Another option: refinancing. Let’s say you refinance from a 30-year mortgage to a 15-year at a lower interest rate. You’re paying more per month but less in interest.
McIntosh said, if your interest rate is already low and you don’t think it’s worth the closing costs of refinancing, you could put extra money into your current payments, as if you have a 15-year mortgage.
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