such as mortgage, credit card debt, student loan and so on. However, it is important to evaluate one own personal financial situation before implementing any such debt relief tips. This is to ensure that you benefit from such advice and not further pile up debts that you become responsible for. So, here are 5 strategies to repay your california mortgage faster.
Make Extra Payments: If there is no pre-payment penalty, you can make extra payments on the mortgage loan. The extra amount of money is taken off from the principal mortgage amount. For example, a $400,000 loan at 4% rate for 30 year fixed will pay off in only 25 years if you make $200 extra payment every month.
Make Bi-Weekly Payments: Bi-weekly payments on California mortgage loans are better than a monthly payment. In doing so, at the end of the financial year, you are paying one month extra payment. Therefore, the extra month payment will shorten the term of the mortgage. Every penny counts when you repaying any sort of debt. For example – Using the same numbers as above, by making bi-weekly payment you would pay off the loan is 25.8 years instead of a regular 30 years.
Get a shorter-term refinance loan: This financial strategy has gained in popularity among the borrowers in California. The rate of interest has nose-dived and it is much simpler for the homeowners to repay their mortgage debts. The advantage of this refinance is that by paying high monthly payments you pay off the loan in considerably shorter period of time. For example – Instead of taking a regular 30 Year Fixed mortgage, consider taking a 20, 15 or a 10 year mortgage. If you can afford the payment, you save on interest cost and also pay off the loan much quicker.
Make a One Time Big Payment: If you get inheritance, gift or a big bonus, you can make one large lumpsum payment. That will reduce your principal balance substantially and thus pay off the loan quicker. You may also ask the lender to “recast” the loan and reduce the monthly obligation for future payments based on the new reduced principal balance.
Monitor Your Mortgage Rate: Its not uncommon for homeowners to lose track of mortgage rates once they buy a home. At Arcus Lending, we manage the customer rates for life by actively monitoring their mortgage rates. That way we are always alert to any refinance opportunity. Getting a lower rate can help homeowners pay off the loan faster, if they keep paying the same mortgage payment as earlier. We offer this service even to clients who didn’t get their current loan with us. As us how you can enroll for this. Else, make sure you are working with a California Mortgage Lender who provides similar service.
Note – the ideas mentioned here are not meant to be a tax advice. You are encouraged to contact your CPA/Financial Adviser before making any significant money decision.