As a travel nurse, your home will be one of your biggest acquisitions in life, making the monthly mortgage payment a major financial obligation for you.
If you had means of paying off the debt faster or how you can avoid paying a lot of interest on the mortgage, that would be really great.
Anyway, the good news is there are actually ways the loan could be paid off faster and the payment plan can be accelerated. Another good news is that interest charges are remarkably low nowadays thus, the cost of the loan isn’t very high and the entire accruable interest paid is lesser compared to the past when interest rates were a great deal higher. The whole reduced rate on interest situation is wonderful because it continues to keep the payment on monthly mortgage lower. In addition, more people are able to purchase houses and the interest paid on the loan as a whole is not that high. However, what most people are not considering is if the reduced interest rate is creating more problems on the other hand. Has this reduced rate on interest changed how homeowners ought to see the payoff alternatives? That question will be addressed when we’re done highlighting faster ways by which mortgages can be paid.
Here are four ways that’ll ensure you are free from paying mortgages in no distant time. We’ll also discuss one way you shouldn’t fast-track your mortgage payments.
- Bi-weekly payments: When you pay half monthly mortgage payment every two weeks, at the end of the year, you would have effectively made an additional full payment which automatically reduces the total number of years it would have taken you to pay off the mortgage.
- Pay a bit extra every month: Adding a little extra to your monthly mortgage payments reduces the principal and eventually leads to paying off your mortgage faster as opposed to only paying the least amount required.
- Refinance: If possible, refinance to a lesser rate of interest and continue to pay the initial amount. By so doing, you’ll keep within the budget you made originally but you will pay off your mortgage faster.
- Switch from a 30-year mortgage to a 15-year mortgage: Changing to a 15-year mortgage enables you to be free from paying mortgages in 15 years. Although your monthly payments will be significantly higher, it offers an interest rate that is lower compared to a 30-year mortgage.
The above-listed instances are all easy and simple methods of paying off your mortgage faster and it is equally a simple means of saving some money as well. However, the question now is if paying off the mortgage is what’s best for you. Whether you choose to switch from a 30-year to a 15-year mortgage or you come to a decision to make extra payments on your monthly mortgage, what matters is that you are content investing your money at the interest rate of your mortgage.
If you’ve got a 4% interest rate on your mortgage and you are also able to get some deductions on tax, think about it and choose if the best option is to pay off your mortgage faster. Let’s suppose you put an additional $500 monthly towards your mortgage for the next 10 years. Now, consider taking that $500 and asking yourself what you’d be pleased to get as rate of return over a 10-year period. Also find out the flexibility, upside potential and liquidity. If your opinion is that there are more potential benefits somewhere else and that in due course you will be able to get something better than 4%, then you might consider other options instead of putting it in your house.
You could also decide to open an account on the side where you can invest your money and take out that money whenever you want to pay your mortgage or take care of other expenses rather than pay off the mortgage faster. Because interest rates are significantly low now more than ever, it may be smart to accelerate your mortgage payments.
Before tying up your funds where it will be hard to access when you need it, make sure you have a savings account with a reasonable amount of liquid money.