Louisville CO Real Estate

Wouldn’t it be great to pay off your home ten years before your lender expects you to do so? What a rush that would be! And, you’d be saving beaucoup bucks on interest, because remember that interest is the biggest part of mortgage costs. But you have to plan for this, because extra payments don’t grow on trees.

First, some advice for those people who are still looking for Louisville CO real estate: Buy something a little cheaper than you were considering. Remember, while many things contributed to the real estate downturn of a couple years ago, one of the big factors was that people simply took on more mortgage than they could handle.

Just how do you know what size mortgage you can afford? Most lenders are requiring a larger down payment these days, so as you work with your figures keep that in mind.

Choose a home that costs no more than double your income. If you do that, you can handle a monthly payment at about 15% of your income. That’s well below what credit agencies recommend, and you will be able to make one and a half or two monthly payments most months. Obviously you can work these figures a little, taking interest rates and length of mortgage into consideration. Go to MyFico.com for a calculator you can use under the Financial Help Center tab.

One caveat here-remember to add into this mortgage figure the amount you will owe toward taxes, insurance, and homeowner or condo association fees. That final figure is what you should view as your monthly mortgage fee. If you follow the rule of thumb we’ve given you, there’ll be room for everything.

Calculate your mortgage costs for a 15- or 20-year loan, but make the loan for 30 years. That allows you money to pay down your mortgage principle, but if you suffer a job loss, you will have a safety net built into your household finances. While you’re making these extra payments, you can even have them automatically deducted from your bank account. But if financial disaster strikes, you can go back to one payment a month until you are back on your feet.

Now, what if you already have a mortgage, and you’d like to pay it off ten years before the loan satisfaction date? There are several strategies to consider:

If you already have a thirty-year mortgage, look at your interest rate. See if you can refinance for a lower rate. Longer-term mortgages generally charge higher interest rates, so you might want to look at a shorter-term loan. Yes, we just told you not to do that-but we’re looking at options here. If you’ve already got a thirty-year mortgage, and your job feels pretty secure, stop by your local bank and have your mortgage recalculated at fifteen- and twenty-year payoffs.

No matter when your payoff is, every month you’ve got to apply whatever extra money you have toward your mortgage. If you win the office football pool or gain some other kind of windfall, take some of it to the bank. It doesn’t have to be a double mortgage payment-just whatever you can afford. Do this regularly, and you’ll be surprised at the difference it makes.

It’s also good to get a month’s job on your loan principal. Look on your annual or semiannual mortgage statement to find out what the principal is, or call your banker and ask. Paying down the principal ahead of time really carves years out of your loan repayment schedule. Just remember that whenever you make any kind of extra payment, you must specify that it should be applied to the principal.

These tips can help you save quite a bit of money while paying off your home and satisfying your mortgage requirements. It will also be advantageous learn more about real estate in Louisville CO and neighboring cities like Broomfield Colorado.