Are you at the right time to pay off your mortgage payments and own your own home without any problems? There are different ways to pay off your mortgage early and what you need to do is choose the method that works best for you.
If you have chosen to pay off your mortgage early and prepayment is the right choice for your finances, here are three options:
1. Pay more than the minimum payment each month
Putting extra money aside from the minimum payment each month is one of the easiest ways to pay off the loan early. Mortgages tend to be long commitments that are usually 15 or 30 years, so paying a little more each month can be a big savings.
2. Make an extra payment each year
Most people with home loans pay their mortgage on a monthly basis, which totals twelve payments a year. But if you split your monthly payment in half and pay it biweekly, that would end up being a total of thirteen payments a year, which wouldn’t represent much of a change.
A good time to commit to an extra payment is tax season. As a bonus, this year the average American received $3,226 as a tax refund, which is probably more than enough to cover an extra payment.
3. Pay a lump sum
If at some point you have extra income that allows you to pay a large portion of your loan, this payment will reduce the length of your loan by months or even years.
A lump sum payment will eliminate the duration of your payments, but the amount of your monthly payment will remain the same. You should note that the payment you make should go directly to your principal and not to any interest.
On the other hand, depending on the type of loan, you may be able to recast your mortgage when you make a lump sum payment. This recast will reduce the total loan amount and monthly payments, but the loan term and interest rate will remain the same.
If you are interested in paying off your mortgage early, it is important that you do your research and get the right advice before making a decision.
You can contact us at FCI Lender Services via email at customerservice@myfci.com or toll free at 1-800-931-2424. Fax: 714-282-5775. Hours of operation are 8 a.m. to 5 p.m. Monday through Friday.
