4 Painless Ways to Pay Down Your Mortgage

By Barbara Pronin

Paying off a mortgage is a long-term commitment—30 years in most cases, and costing hundreds of thousands in interest. But if your goal is early retirement with a paid-off mortgage, you can meet that goal—and save many thousands in interest along the way—by paying down the principal with a few extra bucks here and there.

The caveat, said Moneycrash.com financial advisor David Bakke, is that you specify on these extra payment checks to your lender that the funds are to be used for principal deduction only.

Bakke offers four ideas for paying down your mortgage early while hardly feeling the pinch:

  • Lower the interest rate – Stay alert to opportunities to lower your mortgage rate. Dropping 1.5 to 2 percent interest from a 30-year fixed rate mortgage can lower your payment by several hundred dollars per month. That’s money you can put toward retirement savings, vacations, or kids’ college accounts – or toward paying down your mortgage even faster.
  • Turn a small luxury into an extra payment habit – Consider the small, perhaps daily luxuries you are willing to forego; the $4 latte every morning…a magazine subscription you don’t need. Stash that money and use it toward principal reduction.
  • Turn underperforming investments into equity – Many people have investments that are returning less, as a percentage, than their home mortgage interest rate is costing them. If that’s the case, and you have no reason to think that the investment will turn around soon, it might pay to put that money toward paying down the principal on your mortgage.
  • Stash those regular or unexpected little windfalls – Got an unexpected tax refund? A larger-than-expected birthday check? Or perhaps you save a few bucks on groceries each week by using those clipped coupons? Stash the money you saved, or any other extra amount, and apply it each month to mortgage principal.

Mike Spruell
Realtor®/Broker/ePRO
The Lake Norman Homes Team
Southern Homes Elite
www.LakeNormanRealEstate.pro
866-LakeNorman
704-907-7907

Reprinted with permission from RISMedia. ©2014. All rights reserved.

Q: How Do You Choose a Good Condo?

A: Seek ownership in a well-maintained building, and pay special attention to the financial health of the condo association. Lax maintenance may be a sign of financial trouble, which could result in higher maintenance fees and problems trying to resale the property later.

Things to consider:

Get a copy of the latest financial statement from the condo association.

Ask the board of directors – which is elected by the unit owners from among themselves – if major repairs or improvements are imminent. If so, find out how much they will cost and whether there is enough money in the reserve to cover them.

Check the by-laws, rules and the covenants, codes and restrictions (CC&Rs). You may find, among other things, that they prohibit or restrict pets and the renting of units. Some may require that the board have the right of first refusal on the sale of any unit.

Learn everything you can about the homeowners association, including legal disputes and conflicts. Start by reading the minutes of the association meetings.

Find out the owner-to-tenant ratio. Because many condominiums are often purchased as investments, there could be a high percentage of tenants in the building.

 

 

 

Mike Spruell
Realtor®/Broker/ePRO
The Lake Norman Homes Team
Southern Homes Elite
www.LakeNormanRealEstate.pro
866-LakeNorman
704-907-7907

Reprinted with permission from RISMedia. ©2014. All rights reserved.

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