NORFOLK, VA, Aug 01, 2013—At first glance, prepaying your mortgage sounds like a financially intelligent move. By paying extra principal, your house will be paid off faster, and you will end up paying less interest over the life of your loan.
“You get to save thousands of dollars and shave years off the life of your loan because the additional payments made toward your monthly principal basically constitutes a partial prepayment of your mortgage,” says Louis Eisenberg, Associate Broker REALTOR ABR SFR of Prudential Towne Realty.
However, there can be some drawbacks; each mortgage has specific terms describing how and when prepayment may occur. Some lenders impose a penalty if you repay the loan too soon.
The total savings potential also will depend on how long you plan to live in your home. If you expect to move in the near future, do not expect to reap savings as large as those gained by people who pay ahead of schedule until they own their home free and clear.
“If you're putting additional payments into your mortgage, make sure you're also building up your retirement fund. While your home is your greatest investment, you don't want to end up house rich and cash poor in the end,” advises Eisenberg.
Another note from Eisenberg; If you plan to speed up your mortgage payments, do it on your own instead of enlisting the help from a bank, who may charge a fee.
For more information on paying off your mortgage, please contact Louis Eisenberg, Prudential Towne Realty, 109 E. Main Street, Norfolk, Virginia 23510, leisenberg@prudentialtownerealty.com, (757) 572-7244, or www.LouisEisenberg.com
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