How To Smartly Run Your Mortgage

I will never forget my brother going on about that he was sick of being a tenant when he could be putting the money into his own property. He justified buying a house with this logic only to have to sell it a few months later because he could no longer afford to keep it. He was lucky, he made a profit. Playing this game without doing your homework, however, can cause you years and years of misery and also ruin your FICO score, making it difficult for you to even rent a property again. If, however, you do your due diligence, you can end up with a great asset.

What most people think is that, should the repayments become an issue, all they have to do is to go back to the mortgage company and hand in the keys, end of story. It is not the end though – they company will try to sell the home to recoup its losses – not necessarily at what the home is worth at all. The downside for you – if there is any outstanding balance left over, you will be the one to have to pay.

Another thing often overlooked is how much a mortgage costs – not only in terms of closing costs but also in terms of the interest that you will pay. The amount of interest paid in a normal mortgage is staggering – if more people understood this, fewer people would take in mortgages. That is not necessary though, save as big a deposit for you new home as you can and then put as much additional cash into the bond as you can.

The finance itself is simple – what makes it more complex is that you are dealing with decades to repay the loan, not years. The amounts dealt with are also high. This makes it tempting to reduce the monthly installments to make payments easier but this is a very big error on the part of the savvy investor. The loan really only starts to reduce significantly after the first few years anyway. It makes sense pay more as you can. Know more about mortgage calculators Lacve.com on this site.

Saving money without applying extra to your mortgage is false economy. There is no savings implement out there that can match the amount of interest that you pay out on your bond. Rather scrimp and save and pay more on the loan than waste it in a savings account. When you have paid off your mortgage in half the time, you will be sitting pretty – your friends who weren’t as savvy will still be looking at another decade or so of mortgage payments. Fiscally, it is insane not to pay extra.

Limit the amount of money needed as a mortgage by saving a substantial deposit ahead of time and then get into the savings habit.


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