Chances are you have a 30-year fixed rate mortgage on your Sotheby’s Phoenix home. But a lot can happen in 30 years…..you might raise a family or have a career change. But one thing that doesn’t change is the obligation to make a monthly payment. There are a few things you can do, though, to shorten the term of your loan.
Refinance into a 15-year mortgage
Financially, it’s a huge step, but you can refinance the mortgage on your Sotheby’s Phoenix home and cut the loan term in half. By refinancing into a 15-year mortgage, you’ll be lowering your rate and pay a lot less in interest over the remainder of the loan. What you need to decide is whether you can handle a larger monthly payment until your mortgage is paid off.
Refinance into a lower rate with no change in payments
Another option to refinancing is lowering your payments. If you opt for not cutting your 30-year mortgage in half, the other option is to get a lower rate so your monthly payment will be reduced. Or you might want to continue making the same payment each month on your Sotheby’s Phoenix home and pay your loan off earlier that way.
Make PMI go away
You’ll be able to chip away at paying your mortgage off a little sooner by getting rid of private mortgage insurance (PMI). If you didn’t make a down payment of at least 20 percent on your Sotheby’s Phoenix, you’re probably paying PMI. You can request for this to go away once you reach an 80 percent loan-to-value ratio. Your payment will go down but if you continue to pay the same amount each month, that’s another way you’ll be able to pay off your mortgage faster. If you Sotheby’s Phoenix home has gone up in value, you can opt to refinance.
Use extra money
If you don’t have any extra cash to add to your monthly mortgage payment, consider using tax refunds, bonus checks, or maybe inheritance payments to pay down your loan. This could mean thousands of additional cash going towards paying down your 30-year mortgage.
Pay more on principal
Probably the easiest way to pay down your mortgage is to pay more on the principal each month. On a $150,000, 30 year loan with an interest rate of 3.75%, you can pay off your Sotheby’s Phoenix mortgage six years early by just adding $100 per month in principal payments.
You need to obviously choose what method works best for you when it comes to paying off your mortgage a little sooner. Your job situation, no doubt, will influence your decision.