Benefits of Paying Off Your Mortgage Early

Everybody would like to pay off their mortgage earlier than expected, but do you know what benefits there are to doing so?

Paying off your mortgage has several advantages. Unfortunately, many home owners do not want to pay off their mortgages early because they have to pay more each month to make that happen and that gives them less spending money. To be fair, however, some home owners simply cannot put more money towards their mortgage than they already do. However, if you have the opportunity to pay off your mortgage a few years early, here are some benefits that you can reap.

Financial Freedom
How often do you want to buy something during the month but you can’t because you have to make sure you have enough to pay your mortgage payment? When you don’t have a mortgage payment, you can free up a lot of your money. Your mortgage payments are probably the largest bill you have each month. Just imagine how much more financial freedom you would have if you could have that much more money all the time! You could finally pay off some other debts, open that business that you have always wanted to open or buy that motorcycle that you’ve had your eye on for years.

More Money
The longer you pay on your mortgage, the more interest you are paying. Over a 30-year mortgage, you are paying thousands and thousands of dollars just in interest. However, when you pay your mortgage off early, you will pay less in interest. For instance, if you pay off your mortgage in 20 years instead of 30, that’s 10 years of interest that does not accumulate and get added to the overall cost of the home.

Save for Retirement
Mortgage payments often hinder homeowners from contributing as much to their retirement fund as they should. As a result, many homeowners retire but still need to find a job in order to live. When you pay off your mortgage ten years early, you can start putting that money into your retirement account. Just pretend like you are still making your mortgage payments, but send them to your money market or IRA instead.

Sense of Security
Imagine how good it would feel to own your home free and clear. You would never have to worry about getting it taken away if you lose your job or if financial times get tough. Your home belongs to you and you can do whatever you want to with it. If you want to pass it down to your kids after your death or anything like that, it is your decision since you own it.

Owning your own home is part of the American dream. Everybody wants to pay off their mortgage early so they have more liquidity with their money. You may even be able to refinance at today’s mortgage rates and make it happen that way. With some hard work and dedication, you can pay off your mortgage early and enjoy the benefits therein.

What You Need to Get a House Loan from a Bank

When getting a mortgage loan from a bank, you need to to prove several things to show that you are credit worthy. But what sort of documentation do you need?

Getting a house loan from a bank is one of the most common ways to finance the purchase of a new home. To get a house loan, however, banks require that you meet certain requirements, such as a down payment, proof of income and a decent credit score to evaluate you as a borrower. As long as you have the proper qualifications and you are a good financial risk, you are likely to get approved for a house loan even with today's low mortgage rates.

Proof of Income
Before being approved for a house loan, a lender is going to want to know that you have some form of income so you can make the mortgage payments. Whether you have a job or if you are self-employed, you will need verification. If you have a traditional job, your employer simply fills out a form provided by the bank or lender which includes information regarding the buyer's length of employment, their salary, any scheduled raises and other questions that can tell the lender if the buyer is a good credit risk. Self-employed buyers generally need to provide their tax returns for the previous two years and any current tax statements.

Bank Statements
If you have a checking and savings account, the bank or lender will generally want a copy of your statements for the last two months. This shows the lender that you pay your bills with your checking account rather than cash, which can be a red flag with many banks.

Tax Returns
Lenders will want to see your tax returns for previous years. The number of years you will need depends on the mortgage company. Some require three or more years of previous tax returns while others may only require the returns from the previous year. Ask your lender to find out how many years they require.

Credit Score
As of January 20, 2010, the U.S. Department of Housing and Urban Development announced that new borrowers need a credit score of at least 580 in order to qualify for the Federal Housing Association's 3.5 percent down payment program. If a new borrower has a FICO score below 580, they will have to put at least a 10 percent down payment on a home before they will be considered for a home mortgage. The new regulations are expected to go into effect in the early summer of 2010. Banks, on the other hand, may require a higher credit score if your mortgage is not backed by the federal government. Acceptable credit scores can vary between banks so shop around to find one willing to approve you for a mortgage based on your credit score.

Five Things to Know about Buying Your First Home

Buying your first home can be an exciting and overwhelming experience. However, you can reduce the stress and make the right decisions if you know what to expect during the buying process.

With mortgage rates at an incredible low, many potential home buyers are going to jump into their very first mortgage within the next few months. Buying your first home can be an exciting experience, but it can also be very disappointing if you go in without knowing what to expect. Here are five things you should expect when buying your first home.

Extra Costs
Many first-time home buyers enter into an agreement on their mortgage payments thinking they can afford the monthly bill. Unfortunately, they do not consider the extra costs associated with their mortgage. For instance, there are insurance costs to consider, maintenance, and property taxes. If you do not realize this before buying your home, you may be stretched to the limits financially trying to make the monthly payments.

Know Your Credit History
Your credit history plays a major role in getting approved for a mortgage loan and the interest rates on that loan. But if you do not know your history, you may be surprised when speaking to a lender about getting a mortgage. You may get a much higher interest rate than you expected and that's only if you get approved! Look up your credit score before applying for a mortgage so you have an idea about where you stand when it comes to getting approved.

Patience Is Important
When buying your first home, you might let the excitement get to you. This can lead to bad financial decisions because you simply don't want to wait until you find the home that is right for you. Don't be afraid to walk away from a home if it doesn't fit your budget or your family's needs. There is a home out there that you will fall in love with and you will be able to afford, too.

Get Local Help
Local real estate agents are the best place to go when buying a home. When you enlist the help of a local professional, you can learn about the area's schools and other amenities so you can be sure the home is right for you. A real estate agent can also guide you through the entire process so you make the best informed decisions.

Be Prepared to Negotiate
Negotiation works for both parties – the buyer and the seller. The seller often sets the price of the home expecting the buyer to negotiate it down. The buyer then submits an offer and the seller can either accept it or reject it. The process can take days or even weeks, but it is important to go through it to arrive at the best price for both parties. Don't be afraid to walk away from an offer if the price never matches your budget. There will be other homes that will meet your needs.

Knowing these things about buying your first home will help you prevent making rushed decisions and becoming impatient during the process. Hopefully, these tips will help you become a homeowner for the very first time!