03
Nov
By First Rate Financial Group
Mortgage

The Top Reasons To Pay Off Your Mortgage Before You Retire

The Top Reasons To Pay Off Your Mortgage Before You RetireAs you get closer to your retirement age, you should try to discharge as much of your debt as possible. Unfortunately, many people close to the age of retirement still have a significant mortgage balance they need to pay off. What are some of the top reasons why you should pay off your mortgage before you retire?

Your Portfolio Might Not Generate As Much Interest

You may have a very low rate on your mortgage, which means that your money is better served in the stock market; however, as you approach the age of retirement, your portfolio might not generate as much interest because you are shifting more of your assets into less risky investments. As a result, you might want to pay down your mortgage faster, as the interest rate between your mortgage and your portfolio is no longer as large.

Free Up More Cash

You should also try to pay off your mortgage because you will free up more cash. You want to enjoy your golden years, but if you are still spending thousands of dollars every month paying off your mortgage, your money will not go as far. You may not be ready to tap into those retirement accounts just yet, so you can generate more cash by paying off your mortgage now. Try to pay off your mortgage before you retire to maximize your golden years.

Tap Into Your Home Equity Later

Do not forget that your house can also be a very important retirement asset. If you are concerned about running out of money and your retirement account, you can tap into your home equity as an extra source of cash; however, what if you still have a mortgage on your house? You might not have as much equity to use. While you are still making money now, you should try to pay off your mortgage.

Pay Off Your Mortgage Before You Retire

Clearly, there are a lot of reasons why you should try to pay off your mortgage before you retire. When you retire, your income may drop significantly, so you should try to pay off your mortgage while you still have the flexibility to do so right now. 

 

27
Oct
By First Rate Financial Group
Mortgage

What Do You Need To Know About Home Improvement Loans?

What Do You Need To Know About Home Improvement Loans?Do you want to make some improvements to your house? Home improvements are a great way to make your home more functional, and can also add value to your home. At the same time, performing a home improvement project can be expensive, and that is where a home improvement loan can be helpful. What do you need to know about them?

The Eligibility Requirements

First, just like applying for a mortgage, there are eligibility criteria that you need to meet. The criteria can vary from lender to lender, so you need to talk to your lender to figure out what their requirements are. Some of the requirements include your income, assets, age, credit score, and equity in your home. Keep in mind that whether you are salaried or self-employed can also impact whether you can qualify for a home improvement loan.

The Loan Amount

You should also think about the total amount of money you have to borrow. Usually, you are given a maximum amount of money you are allowed to borrow based on many of the factors listed above. In general, your loan amount cannot exceed a specific loan-to-value (LTV) ratio based on the equity in your home. If you have a specific amount of money you have to borrow to complete your home improvement project, you should talk about this with the lender.

The Interest Rate

It is not unusual for the interest rate on a home improvement loan to be slightly higher than a typical mortgage. On the other hand, there are options where you can collateralize the home improvement loan to get a better interest rate. You may want to talk with the lender about your options to make sure you get as low of an interest rate as possible. It could save you thousands of dollars over the life of the loan.

Talk About Your Options With A Lender

In the end, these are just a few of the most important points you need to keep in mind if you are interested in taking out a home improvement loan. There are plenty of options available, so be sure to review the benefits and drawbacks of each option with your lender.

26
Oct
By First Rate Financial Group
Mortgage

Amortization: What You Need To Know About How Your Loan Is Paid Off

Amortization: What you need to know about how your loan is paid offIf you own a home, you will see a lot of information about your payment schedule. It specifies exactly what payments you have to make, when you have to make them, and how much of each payment will go toward your principal and interest. This is called an amortization schedule, and it is typically designed in such a way that your last payment pays off your loan down to the penny. How does this impact the life of your loan?

Most Of Your First Few Payments Go Toward The Interest

During the first few years, the majority of each payment is going to be directed toward the interest that you owe. Then, as you pay off more of the loan, the balance will generally shift to the principal. By the end of your amortization schedule, almost all of your payments are going to go toward principal, with very little of each payment going toward interest. If you make additional payments ahead of schedule, those payments should go toward the principal on your loan.

How Lenders Calculate How Much You Owe

Your mortgage lender is going to collect a lot of information about your financial history. This might include your proof of employment, your credit score, and your bank statements. Then, they will calculate the interest rate on the loan. They will use this information to draw up an amortization table, figuring out how much interest you will pay every month based on your interest rate. Finally, your lender will figure out how much of each payment will be applied to your interest and principal.

Why An Amortization Schedule Matters For Your Mortgage

There are several reasons why your amortization schedule is so important. First, it dictates how quickly you build up equity in your home. The faster you build up equity, the more financial freedom you have. You might want to draw on your home equity for certain purchases down the road, and you want to maximize the amount of money you get back when you sell your house. Furthermore, your amortization schedule gives you peace of mind, knowing that your monthly payments are going to be the same over the life of the mortgage.