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How Paying More on Your Mortgage Can Save You Money

It’s the American dream to own your own home and dreamers will go to any lengths to accomplish this even if it means borrowing thousands of dollars to be paid back over a 30 year period. It’s quite an obligation to make 360 payments month after month with the bulk of the money going toward interest, at least in the beginning.

 

The interest on an average home over a 30 year period can account for twice the cost of the home.  Interest is working against you 24/7/365.  Wouldn’t it be wonderful if you could pay off your debt years sooner and save thousands of dollars? 

 

You can.  It just takes discipline and perhaps a little budget adjusting. It’s no secret that paying the mortgage twice a month, instead of only once will save you thousands and pay off your debt years sooner.  Some call it the bi-weekly mortgage plan.

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Plug in Points to See How Your Financing Will Pay Off

One of the most innovative financial markets is the home mortgage loan sector.  And, when you toss points into the mix it adds convolution to an already complicated process.  Most buyers don’t understand the concept of points and hesitate to ask or go to the trouble to learn about the process.  They become overwhelmed and can be at the mercy of whatever the lender offers.

 

It’s actually quite simple.  Points are fees paid to a lender for a loan.  The points are usually linked to interest rates with the more points you pay for, the lower the interest rate.  You can view them as pre-paid fees.  It’s sort of pay now with points or pay later with interest.

 

If you have the cash on hand to pay points and you still can’t decide if you should pay them to get a lower interest rate ask yourself what you would do with the money if not spent on points.  If you’re buying a home you probably have many needs for the extra money but don’t be short-sighted.  Invest for the long term.

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