Posts Tagged variable rate mortgage
Your Mortgage Paid by your Thirties
Posted by Top Home Loans in Mortgage Advice, Mortgage News on August 1, 2010
For many people, they have not even been considering purchasing a property in their twenties; however, some people are able to have their properties paid off by their thirties. Are they rich? Did they inherit their properties? Some did, yet others were able to pay off their properties by being diligent.
How to Pay off your Property in a Short Time Frame
A mortgage is the way that most people purchase a property; however, many people view the payments as a form of rent payment and not an investment. If you view your house differently, then it is easy to see that you will be able to own your home faster. Let’s say that your homes mortgage payment is $2000/month or $24,000/year.
If you pay off your mortgage when you are 35 instead of 60, then you will be saving that amount of money that you would have paid to your mortgage payments. This would result in $840,000 dollars of saved mortgage payments over the course of your lifetime.
Wouldn’t you rather have that close to a million dollars instead of the bank?
How can you achieve this?
Their are many small, simple changes that you can make to pay down your property as quickly as possible. The following is a short list of some of the best ideas:
- Buy a smaller house
- use your lump sum payments
- increase your payments regularly
- save at least 20% before purchasing
- choose a variable rate mortgage
- choose bi-weekly accelerated payments
- find a strong, skilled mortgage professional (like us)
- work a second job (evenings, weekends)
- live like your poor
- sell your car, if possible
- don’t quit your job, unless you have a new one lined up
- learn about mortgages, educate yourself
- down size if your house is too big
- get a mortgage that compounds annually if possible
Use all the above strategies to pay down your mortgage as quickly as possible. The quicker you pay off your mortgage, the more money you will have later in life.
You can thank me later.
How do you pay off your mortgage faster? When did you get your mortgage paid? Leave your response in the comments below.
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The Unusual Mortgage; What some People do with their Mortgage that you don’t!
Posted by Top Home Loans in Economy, Mortgage Advice on July 10, 2010
John was an average home owner. He went to the bank with very little money, a modest job, and requested the money to get a mortgage. He was approved with some effort, and he decided on a mortgage with the following details.
Down Payment: 5% of the purchase price.
Mortgage Rate: 5 year variable rate mortgage
Amortization: 35 years
Property Value: $250,000
The payments were reasonable, and John made all his payments on time every month. He did not increase his payments at all, yet after having his mortgage for the 5 year term, his mortgage was paid in full. How can this be? How can a man, with little savings, pay off a mortgage in a 5 year term even with a 35 year amortization?
The answer is simple. John paid his mortgage correctly by fully using his prepayment options. Every year John received a bonus or a pay increase from his work. He used this money ever year to pay down his mortgage. John didn’t always receive a bonus, but he sometimes had to limit his expenses to make the 20%. Before John began his mortgage, he told himself that he would make every effort to maximize his lump sum payments. Each year he had to make sacrifices to save money to pay his mortgage, but he was willing to make those sacrifices.
John isn’t a millionaire, he isn’t a financial savvy guy, and he is isn’t a mortgage expert. John only followed one simple rule to pay off his mortgage.
The sooner I pay off my mortgage, the less interest that I will pay.
To understand this, John also had to understand that the more money he paid to his mortgage, then the less interest he would pay.
With John focusing on paying off his debt, he achieved financial freedom.
How do you pay off your mortgage faster? What techniques do you use? Leave your response in the comments below.
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Variable Rate Mortgages are not Very Scary at all
Posted by Top Home Loans in General Banking, Mortgage Advice on July 8, 2010
When most people think of a variable rate mortgage, they think of their payments increasing double or triple or more. They see a vision of not being able to pay their bills, and interest rates that are huge even if they are very low right now. Many people with a mortgage would prefer to have security of knowing what their payments are instead of being open to the risk of their payments going up.
This is a relatively legitimate concern that most people have; however, it is not usually accepted. It is known that 95% of the time, a variable rate mortgage will out perform a fixed rate mortgage. This will result in a mortgage that is paid off faster, and lower mortgage payments. This is because you will be paying less money to interest and more money to the principle balance of the mortgage.
The payments on a variable rate mortgage, most people think, can change at any time and without notice. This is not the case at all, prime rate can only change on average one time a month. This means that your mortgage company will contact you to advise you when your mortgage rates go up, and you are advised when your mortgage payments will be changing. You will know, with plenty of time, that your rates and payments may be changing.
With most banks, you do not need to stay with a variable rate for the full five years. Instead, many banks offer the option to switch to a fixed rate at any time as long as you fit the requirements to switch to a fixed mortgage rate. This will allow you to lock in if you feel it will be more beneficial. However, keep in mind, that 95% of the time, it is better to stick with a variable rate mortgage.
Also, the thing to consider is how much mortgage interest you are paying between the multiple options. If the fixed rates and the variable rates are the same, then you won’t be getting any interest savings from choosing a fixed mortgage rate over a variable mortgage rate. If the mortgage rate is 50% lower on a variable rate, then the fixed rate mortgage, then you will be paying over double the amount of money towards interest that is going to the bank. That means you will be paying off your mortgage by almost 50% less than on a variable rate. Wouldn’t it be better to pay your mortgage more than paying the bank mortgage interest?
Mortgage interest usually equals to 2 to 3 times the property value. Over the course of your life, you will pay the bank hundreds of thousands of dollars in mortgage interest. It would be better to pay the bank less money towards your mortgage. By giving up a bit of security and choosing a variable rate mortgage, then you will most likely see your mortgage paid off much faster.
Do you have a variable rate mortgage? Why did you choose a variable rate mortgage? Leave your response in the comments below.