Can’t wait to have your Columbia SC mortgage paid off so you can do other things with that money each month? There are some smart ways to reach your financial goal of paying off your Columbia SC mortgage faster, and wiser.
Refinance Your Columbia SC Mortgage to a 15-Year Term
Getting a 30-year mortgage is the common track most people follow when getting a Columbia SC mortgage, mainly to keep their payments as low as possible. If you can afford the higher monthly payments on a 15-Year term, consider refinancing to the shorter term loan. You’ll usually get a lower interest rate, and you’ll pay off your Columbia SC mortgage sooner, thereby reducing the amount of interest you pay over the life of the loan.
The trade off is, your monthly payments will be higher because you’re paying more of the principal each month. Here’s an example:
$250,000 30-Year Loan @ 5.0 percent, monthly payment is $1,342.05 $250,000 15-Year Loan @ 4.5 percent, monthly payment is $1,912.48
The total interest you’d pay on the 30-Year Loan would be $233,139.46
The total interest you’d pay on the 15-Year Loan would be $94,246.98
So as you can see, shortening your Columbia SC mortgage to 15 years saves you a ton of interest over the life of the loan.
Make Extra Payments When You Can
If refinancing to a shorter term is not possible for you, consider making extra principal payments each month. When you pay more than your loan requires, and when you designate the extra payments to be applied against the principal balance of your loan, you end up reducing that balance at an accelerated rate. Be sure your lender applies the extra payment towards principal and not towards future payments owed, or you’ll just be giving them the gift of interest they haven’t yet earned.
To achieve the greatest benefit, the increase should be at least 1/12th of a normal monthly principal and interest payment.
Check Your Property Taxes and Insurance
For most people, their Columbia SC mortgage payment includes four things: your principal, interest, property taxes, and insurance – which is collectively called your PITI.
Most people tend to focus on the principal and interest when they’re looking to pay down their mortgage faster. The amount you pay in property taxes and insurance, however, is often overlooked and this could be a big mistake.
If your property tax rate was set during the heady boom days of Columbia SC real estate, you might be paying taxes based on an assessment that’s no longer valid. It might be worth it to protest the assessment with your county to see if your rate should be re-adjusted to reflect today’s lower home values.
Re-investigate your insurance. If you opt for a higher deductible, you could get a lower premium, which will result in a lower monthly mortgage payment.
If your property taxes are lowered after the re-assessment, and/or your insurance premium is lowered, you can continue to make the same monthly payment and more of your money will be applied towards the principal and interest, which will help you pay down that loan much faster.
Hopefully these tips to pay down your Columbia SC mortgage faster and more wisely will help you become a better handler of your finances. For more mortgage tips, check out our Columbia SC Mortgage Info section under Columbia SC Real Estate Categories to your right.
Energy efficient mortgages are a new and upcoming way to finance Columbia SC area homes if you’re planning to go “green”. Green homes cost more, and that added cost is often the burden that prevents more people from going the energy efficient route when choosing a new home or modification.
Energy efficient mortgages extend your buying capacity by helping you qualify for a larger mortgage. The lower utility bills you’ll have as a result of “going green” will give you more money to spend elsewhere rather than sending it to the utility company.
Energy Efficient Mortgages for Columbia SC homes are one of many FHA programs that insure mortgage loans–and thus encourage lenders to make mortgage credit available to borrowers who would not otherwise qualify for conventional loans on affordable terms (such as first time homebuyers) and to residents of disadvantaged neighborhoods (where mortgages may be hard to get).
Borrowers who obtain FHA’s popular Section 203(b) Mortgage Insurance for one to four family homes are eligible for approximately 96.5 percent financing, and are able to add the upfront mortgage insurance premium to the mortgage. The borrower must also pay an annual premium.
For more information on energy efficient mortgages, visit HUD.gov. or contact an FHA approved lender.
To get more Columbia SC mortgage information, visit our Columbia SC Mortgage Info section under our Columbia SC Real Estate Categories to the right.
Paying off your Columbia SC mortgage early may not actually be a smart idea, especially if your mortgage rate is low, or free, when you factor in inflation and tax deductibility. Making a larger payment is considered foolish if you’re not saving for emergencies or retirement first.
Savvy homeowners have long added extra money to their monthly mortgage to save interest, but it’s not necessarily the smart thing to do in this world of record-low interest rates.
Most lenders will allow borrowers to make extra payments towards their principal whenever they’d like, thereby taking months or years off a loan’s repayment period. Not to mention the interest you’d save over a 20 or 30 year period.
For example, making an extra payment each year on a $250,000 30-year fixed rate mortgage at today’s average rate of 3.4% will cost you an additional $1,110 a year, but will shorten the length of your Columbia SC mortgage by 44 months. You’ll also save roughly $20,300 in interest by paying the mortgage off in 26 years instead of 30.
Retiring your Columbia SC mortgage early actually has more drawbacks than advantages in today’s low-interest-rate environment.
Experts believe you shouldn’t even think about making extra mortgage payments until you first:
- pay off all high-interest credit-card balances;
- build up emergency savings to cover six months of living expenses if you lose your job or suffer some other serious setback;
- make sufficient annual contributions to 529 plans or other college-savings vehicles to cover your or any dependents’ future educational expenses;
- make the maximum allowable contribution each year to your and your spouse’s 401(k) and individual retirement accounts. For most married couples, that means putting $17,500 into each spouse’s 401(k) and another $5,000 into each person’s IRA (the maximum the Internal Revenue Service will allow as of 2013). People age 50 or older can also add another $1,000 “catch-up” IRA contribution, and sometimes put an extra $5,500 into 401(k)s.
Not many people can check off each of those items, but if you lose your job, all that extra money you’ve poured into your house isn’t something you can get your hands on when you need it without going through a refinance, but if you’ve lost your job, you won’t qualify for a refinance.
Experts add that if you have lots of spare cash and are tempted to put that into shaving years off your Columbia SC mortgage, setting aside that same extra principal for retirement money will give you more chance to enjoy compound investment returns.
The longer you save for retirement, the better off you’ll be. Not paying off the mortgage and not having any retirement. Then you may be forced to think about something like a reverse mortgage later on just to provide you the lifestyle you may have been able to have had you saved more instead of paying down that Columbia SC mortgage early.
For more Columbia SC mortgage information and tips, check out our Columbia SC Mortgage Info section under the Columbia SC Real Estate Categories to your right.
Columbia SC mortgages continue to see an increase over their all time record lows, but the good new
s is, in terms of being relative, rates are still near the bottom. There’s still plenty of opportunity to refinance or buy a home and save a bundle. But if you keep waiting, all indications are you’re going to miss out.
U.S. job growth grew modestly in January and gains in the prior two months were bigger than initially reported, supporting views the economy’s sluggish recovery was on track despite a surprise contraction in output in the final three months of 2012.
According to the most recent Labor Department statistics, employers added 157,000 jobs to their payrolls last month. There were 127,000 more jobs created in November and December than previously reported.
The unemployment rate, however, edged up 0.1 percentage point to 7.9 percent. The closely watched report also showed an increase in hourly earnings and solid gains in construction and retail employment.
Where Do Columbia SC Mortgages Go From Here?
It would appear that Columbia SC mortgages will continue to slowly get more expensive, and according to analysts who track and forecast these things, rate increases show no sign of stopping anytime soon. There may be brief pauses in the increases, even a slight move down from time to time, but all indications now point to continuous increases in what consumers will pay for Columbia SC mortgages for the foreseeable future.
A survey of analysts showed split expectations, with 40 percent forecasting a rise in rates and 40 percent anticipating a fall. 20 percent said they don’t expect a great variance from where rates are now. So, it’s anyone’s guess.
For more on Columbia SC mortgages, see our Columbia SC Mortgage Info section of articles under the Columbia SC Real Estate Categories to your right.
Most economists agree the housing crisis remains the biggest obstacle to economic recovery in the US. But there’s no consensus on how best to fix it and the rate of foreclosed properties has hit a record high.
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