Should You Pay Off Your Mortgage Early?

When you own a home, the thought of having a mortgage for the better half of your life can be very daunting. Especially in times like we're experiencing now, having any kind of debt can leave you with uncertainty. Many people are looking at ways to cut down on their expenses and to chip away at their debts to ensure a more secure future, including paying off their mortgage early. There are some pros to paying off your mortgage early. Depending on your situation and reasoning, it could be a great financial step. Here are just a few things to consider before deciding whether to pay off your mortgage early. 

Benefits of Paying Off Early

Paying off a mortgage early means a large sum of money freed up each month. This can be a great opportunity for homeowners to put that extra cash towards a retirement fund. Eliminating a mortgage payment also means you’ll need less income to cover your daily expenses in retirement.

Early payoff can also result in paying less in interest during the life of the loan. Additionally, it can provide homeowners with an asset that could be leveraged when needed. If you've got equity in your home, that could be used to open a home equity line of credit to cover any emergency expenses that might arise.

Risks to Consider

While there are benefits to early payoff, there are also some risks to consider. Paying off a large sum toward your mortgage could deplete any emergency reserves you might have saved up and leave you cash poor. This means, you may be forced to take out a loan to cover any unexpected expenses that could arise. 

Another thing to consider is that paying off your mortgage eliminates the option to take a tax deduction on the interest you paid on the loan, resulting in a higher annual tax bill. You could also miss out on investing in other savings avenues that are experiencing high growth. 

You may also be required to pay a prepayment penalty. The amount of a potential prepayment penalty varies by lender but could range from 2 to 5 percent of the total loan balance, which can get expensive.

Talk to a Trusted Mortgage Lender First

As you consider whether or not paying off your mortgage loan early is right for you, be sure to talk to a trusted lender who knows the business, and can guide you down the right path. The pros and cons of this decision should not be taken lightly, as your decision affects your financial future. If you've got questions about your mortgage loan, we're here to help. Give Team Lasson a call today to discuss your financial future and how the life of your mortgage can affect it. Let me share with you some ideas on how you can combine strategies to potentially pay off your mortgage faster and more efficiently put your money to work for you.

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Michael Lasson

Senior Loan Officer

NMLS #: 493712

4655 B Osage Beach Parkway

Osage Beach, MO 65065

Direct: (573) 746-7211

Cell: (573) 216-7258

e-Fax: (866) 397-0318

Email: mlasson@fsbfinancial.com

Website: www.YourLakeLoan.com

**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.

Understanding the Mortgage Payment Process

When you purchase a home, unless you're one of the lucky few that can afford to pay cash, you're going to need to take out a home loan. Your mortgage lender at the Lake of the Ozarks will discuss your options with you, offer competitive interest rates and eventually settle on a monthly mortgage payment. While many people pay their mortgage every month, not everyone understands how that payment process works. Keep reading to learn about amortization and how paying off your mortgage works.

How Mortgage Loans Are Paid Back 

Mortgage loans are paid off through what is known as a "mortgage amortization process." Over the life of the loan, each payment is first applied to the interest accrued during the current payment period, and then to reducing the outstanding principle amount. With this payment schedule, after 30-years, you'd end up paying close to double your initial mortgaged amount. What looks and seems like a low rate could add up to hundreds of thousands of dollars over the course of thirty years. Therefore, if you're financially capable, you might consider paying off your mortgage faster. Talk to your trusted Lake of the Ozarks mortgage lender to see if there are any penalties for paying off your mortgage early.

Should I Pay Off My Mortgage Faster?

Who wouldn't want to pay off their mortgage faster? Living a debt-free lifestyle is something many Americans strive for. However, it's not always possible for everyone. The question shouldn't be, "do I want to pay off my mortgage faster," but rather, "can I pay off my mortgage faster?" Do you have the financial ability to set aside more money for a larger mortgage payment each month? Keep in mind that your mortgage likely has a lower interest rate than other debts such as credit cards. Determine what the best use of your money is before choosing to pay off your mortgage faster. Paying off your mortgage faster also has tax implications on your mortgage deduction. For advice on how to pay off your mortgage faster, check out our previous blog titled, "How to Pay Off Your Mortgage Faster."

If you don't currently have a mortgage you're working to pay off, but are considering purchasing a home at the Lake of the Ozarks, give me a call at 573-746-7211. Together, we will discuss your options, I'll offer competitive interest rates and back it up with the first class service you deserve. With my help, you'll be in your dream home at the Lake of the Ozarks in no time!

For Lake area news, resources and tips on financial services, please 

LIKE my Facebook Page, Follow me on Twitter or Connect on LinkedIn

Michael Lasson

Senior Loan Officer

NMLS #: 493712

4655 B Osage Beach Parkway

Osage Beach, MO 65065

Direct: (573) 746-7211

Cell: (573) 216-7258

e-Fax: (866) 397-0318

Email: mlasson@fsbfinancial.com

Website: www.YourLakeLoan.com

**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.

How to Pay Off Your Mortgage Faster

Purchasing a home at the Lake of the Ozarks is one of the biggest investments you'll ever make. Very rarely are people able to cough up that much cash, and therefore, financing is needed. Typically, that mortgage loan will take 15-30 years to pay off. Today's blog from your Lake of the Ozarks mortgage lender offers some advice on how you might be able to pay off that loan a little faster!

1. Simply Pay More Each Month.  

If you can afford a slightly higher monthly payment, do it! A great place to start is to divide your monthly payment by 12 and add that amount to your monthly payment. This results in 13 payments in a matter of 12 months. By paying down the principal as you go, you'll not only pay off your mortgage faster, but also save money on the interest. However, before making any extra payments, talk to your mortgage lender at the Lake of the Ozarks to make sure the extra payment is being applied to your mortgage properly. Then always check your next statement to ensure that money has been properly applied. Also, make sure that there aren't any penalties for paying off your mortgage early. This is probably the most simple way to pay off your mortgage faster, as long as you stick with it. However, if you don't have the extra money one month, you're not locked in to paying it.

2. Refinance to a Shorter Term. 

Another option would be to refinance your Lake of the Ozarks mortgage loan to obtain a shorter term. If you have a 30-year loan, talk to your lender about refinancing into a 15-year mortgage. Not only will this help you pay off your mortgage faster, but you'll also save on interest. In fact, shorter-term mortgages often carry interest rates 1/4 of a percentage point to 3/4 of a percentage point lower than 30-year mortgages. Keep in mind that with this option, it's like getting a new mortgage. You will have extra paperwork and there are closing costs involved. Before making a refinancing decision, be sure to do the math to determine if the savings outweigh the upfront costs of refinancing. This option is a lot less flexible than just paying extra each month; if you decide you don't have the extra money one month, you're still locked in to that higher payment.

3. Throw Extra Cash at Your Mortgage. 

Maybe you don't have enough extra income each month to increase your monthly payments. Do you get bonuses at work though? Did you get a large tax refund? Any extra large sums of money that you get can easily be applied to your mortgage to help pay it off faster. This option allows you pay extra only when you have extra available. You don't want to be struggling financially because you want to pay off your mortgage faster. There needs to be a balance in what you can afford. The only downside to this option is that the payments are irregular and therefore, it's hard to determine a pay off date. You also want to make sure that you don't throw too much of that extra money at the mortgage. Be sure to save some of it back in an emergency fund.

For all your mortgage loan questions, I'm here to help. As your lender, I'll discuss your Lake of the Ozarks home financing options, offer competitive interest rates and back it up with the first-class service you deserve. For all your Lake of the Ozarks home loan needs, give me a call at 573-746-7211.

For Lake area news, resources and tips on financial services, please 

LIKE my Facebook Page, Follow me on Twitter or Connect on LinkedIn

Michael Lasson

Senior Loan Officer

NMLS #: 493712

4655 B Osage Beach Parkway

Osage Beach, MO 65065

Direct:  (573) 746-7211

Cell: (573) 216-7258

Fax:(866) 397-0318

Email:  mlasson@fsbfinancial.com

**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.

5 Tips to Paying Off Your Mortgage Faster

Your home is typically the most valuable asset you have, while your mortgage at the Lake of the Ozarks is often your largest debt. Depending on the terms of your loan, you are adding thousands of dollars more to the price of your home. The faster you can pay off your Lake of the Ozarks home loan, the more money you're going to save. Not only will you no longer have the burden of that huge monthly payment, but you'll have security in owning your own home. Here are several great tips to help you pay off your mortgage faster!

1. Pay a Little Extra Each Month. 

Try to add a little extra to each payment you make. Whether it be $10 or $100, choose what you can comfortably afford because every little bit helps. Use a mortgage calculator to see how adding just a little to your payments can save you money in the long run. When you pay extra, make sure that it is being applied to your principal and not set aside for the next month's payment. By paying down the principal, the amount that your interest is calculated on decreases. You should also check your contract before making extra payments, as some have prepayment penalties.    

2. Pay Every Two Weeks. 

Rather than making one payment a month, consider paying biweekly. This method of payment takes advantage of the fact that there are 52 weeks in a year and only 12 months. When the year is over, you will have made 26 half payments, which is the equivalent of 13 full monthly payments. Check to see if your bank will set up a biweekly payment plan. Some will do it for free and some will charge you for it. Be sure to have the bank credit the extra payments toward the principal so you save more on interest; some banks will hold the extra payments until the end of the year and therefore, your still paying interest on that amount.

3. Apply Any Extra Cash You Get.

Tax season is a great time to reduce the principal on your Lake of the Ozarks mortgage. Consider applying your next tax return towards your mortgage principal. If you receive any other larger sums of money throughout the year, maybe as a Holiday bonus at work or a commission check, consider applying those amounts to your mortgage principal as well. The more you can pay upfront, the more you'll save in the long haul and the faster you'll be able to pay your home off.

4. Refinance Your Home. 

Refinancing your home at the Lake of the Ozarks to either lower your interest rate or shorten the term of your loan is another great way to get your home loan paid off faster and save money. If you have an adjustable rate loan, you can refinance to get the comfort of the stability that a fixed rate loan offers. Depending on what interest rates are available, you may be able to get a 15 year loan for a little more than what you currently pay for a 30 year loan.

5. Downsize Your Home. 

If you are struggling to pay off your mortgage, one of the simplest solutions is to downsize. Do you really need 2 spare bedrooms or that extra office space? While having a nice big spacious house is something you've dreamed of, think about how much more enjoyable life could be without all that debt hanging over your head. If your near retirement age or approaching an "empty nest," downsizing makes the most sense. In this economy, it's great knowing that your home belongs to you instead of the bank.

As your Lake of the Ozarks mortgage lender, I will work with you to figure out the best way to pay your mortgage off faster. For all your home loan and refinancing needs, contact Lake Lender Michael Lasson at 573-746-7211.

For Lake area news, resources and tips on financial services, please 

LIKE my Facebook Page, Follow me on Twitter or Connect on LinkedIn

Michael Lasson

Sr. Residential Mortgage Lender

NMLS #: 493712

2265 Bagnell Dam Blvd, Suite B

PO Box 1449

Lake Ozark, MO 65049

Direct:  (573) 746-7211

Cell: (573) 216-7258

Fax:(573) 693-9141

Email:  mlasson@fsbfinancial.com