A mortgage is an agreement that most of people sign when they need to buy a house or other properties. They not only need to shop for a home, they need to shop for a home loan. According to the research, it is found that almost half of the borrowers didn’t shop around before settling on a mortgage. In most cases, the term mortgage refers as a “security” for the home loan. That means, in any case, you have not made the required monthly payment for several months or more, your lender can foreclose on the property. Hence, Mortgage and Home loan are often used interchangeably.
If you have a good Income, credit and bank balance, you’ll be able to secure mortgage pre approval quickly and proceed directly to the home buying procedure. But if, you do not have all these things or have less-than-stellar credit and little cash, you’ll want to start the procedure before you look at houses – maybe more than a year before.
Finding the best deal on a mortgage can be a challenging part of the whole procedure because fees and rates change daily or sometimes more than once a day. Either you go directly to a bank for the best deal or you may select a mortgage broker, there are so many small decisions to make along the way to home ownership. Among all these small decisions, the one of the most important decision is to select the type of mortgage loan that suits you according to your comfort and requirement.
Home buyers hope to jump into the mortgage market will find four basic types of loans, for the most part.
- Fixed Rate Mortgage
- Adjustable Rate mortgage
- Interest Only Jumbo Loan
- Balloon Mortgage
The other important question that comes in almost everyone’s mind while signing that agreement – Should we pay off our mortgage early. Most of people think that there is no better feeling than being debt-free. Earlier returns on money may be a better way to reduce the interest expenses and a paid off house means you’re safe and secure. Apart from that, there are some other advantages also to paying off the mortgage early.
While the decision may be more difficult in recent years due to record low interest rates, there are some excellent and easy ways to pay off mortgage early.
Refinance and Reinvest:
Beside of making it possible to refinance, a low interest rate also helps to pay off your loan early. Similarly reinvest the saving toward the new loan is the other way to clear your loan early. However, you need to get complete information about your interest rate and these two terms, from your mortgage broker.
Make biweekly Payments:
This method is a very simple way to shorten your mortgage without a significant budget increase. You just need to talk to your lender to setting up this method by paying half of your regular payment every other week instead of just once a month.
Increase Monthly Payment:
Whether it is a difficult method, but can easily pay off your loans earlier. This is perhaps the most appealing methods for those who have better bank balance and income. You can increase your monthly payments by discussing with your lender any time according to the agreement.
Select One-time Loan Payment:
If you do not prefer to pay monthly payment and you have enough money to pay the full payment, then this option is best for you. The method you choose depends on your personal preference. You may pay your remaining payment also, whenever you will feel free to pay complete loan at one time.