Mortgage Debt Elimination How To Save Yourself From Compounding Interest Rate

Mortgage Debt Elimination – How to​ Save Yourself From Compounding Interest Rate
Mortgage debt elimination,​ this is​ the​ word that rings a​ bell in​ many of​ the​ home owners out there .​
Ever imagined paying off your mortgage in​ one go when you​ strike a​ first prize lottery or​ the​ day you​ inherited a​ lump sum of​ cash from a​ deceased old woman down the​ street whom you​ always say good morning to? Reality says this is​ not going to​ happen nor is​ there any magical formula that will pay off your mortgage the​ next day.
Well,​ if​ you’re still reading after the​ first paragraph,​ there are actually ways that would make you​ better off by lightening your mortgage debt .​

First off,​ one of​ the​ most commonly adopted methods is​ to​ increase your monthly mortgage repayment .​
By increasing your monthly repayment rates,​ you​ are effectively shortening the​ duration of​ your repayment period .​
I’m sure most of​ the​ homeowners out there would realize that by the​ end of​ their repayment period,​ they would have paid off more than the​ value of​ the​ house itself .​
This addition of​ payments would namely be known as​ interest rates .​
By shortening your repayment period,​ you​ are effectively decreasing the​ amount of​ interest rates you​ pay .​
a​ quick illustration says that if​ you​ pay an​ extra $100 per month for a​ $120,​000 (30 years @ 9%) mortgage,​ you​ would be looking for a​ saving of​ approximately $80,​000 after the​ end of​ your repayment .​

It should be noted that there are shortcomings in​ increasing your mortgage repayment rates .​
For example,​ the​ extra $100 per month could have been invested elsewhere that would potentially generate more than $80,​000 under the​ same period of​ time .​
However imagine this; if​ you​ are someone constantly being tempted to​ stick your hand into the​ piggy bank,​ increasing your repayment rates would be a​ wiser option as​ there is​ a​ good chance of​ you​ blowing away your investment/savings before the​ compounding of​ interest rate takes effect .​

Secondly,​ this seems like a​ rather old suggestion but if​ you​ cannot afford more than 20% down payment,​ you​ should rethink the​ value of​ your house .​
the​ reason is​ because for a​ less than 20% down,​ you​ will be required to​ pay for additional insurance which is​ known as​ mortgage insurance .​
Unlike a​ life insurance,​ the​ mortgage insurance is​ there to​ protect the​ better interest of​ the​ bank (ssshh,​ let’s not say you​ hear that from me) because it​ covers only the​ mortgage .​
Life insurance basically covers you​ because in​ case unpredicted fate takes place in​ your life,​ the​ compensation would be able to​ cover your mortgage and your life whereas mortgage insurance basically covers only,​ errr the​ mortgage .​

Last but not least,​ consider this when you​ are taking your mortgage .​
If you​ are a​ wise money saver (or we call them penny pincher in​ some cases) and if​ this is​ within your means,​ take a​ shorter repayment period .​
in​ the​ short term,​ it​ may seem you​ are paying more compared to​ other homeowners .​
However consider this,​ your mortgage is​ spread across for 15 years as​ compare to​ 30 years and effectively,​ although you​ are paying an​ extra say $100 per month,​ the​ savings from interest rate paid for a​ 30 years mortgage will not even come close to​ what you​ have saved from a​ 15 year mortgage .​
Additionally,​ the​ plus is​ you​ get a​ peace of​ mind and security knowing you​ have paid off your mortgage earlier .​

Think about this,​ buying a​ house is​ one of​ life’s biggest purchase .​
If you​ think you​ are not ready,​ take a​ little time off for reconsideration as​ the​ decision you​ make today would affect you​ for years to​ come.
Mortgage Debt Elimination How To Save Yourself From Compounding Interest Rate Mortgage Debt Elimination How To Save Yourself From Compounding
Interest Rate Reviewed by Henda Yesti on July 02, 2018 Rating: 5

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