The best way to pay your mortgage early
When we talk about mortgage loan, the lenders have their mortgage products. Moreover, if we look deeper into it, it comes under the following types, fixed rate mortgage, Adjustable rate mortgage, and Government guaranteed mortgage. Today, a mortgage has turned to be a significant burden for the loan takers. As per a current study, there has been a recorded rise in the principal-and-interest mortgage payment by almost around 16 percent. Also, the median price paid for a home has risen by less than 6 percent in comparison to the last year.
There are many times when people plan of getting rid of mortgage pressure, but it comes around again. However, if the financial planning is done right, the mortgage can be paid off before the loan is up. Once you are clear with your mortgage payments, you can put your savings into other uses like for your retirement plan, college education for your child, or an emergency. There are many ways which can help you achieve this. So, amongst all the mortgage points calculator is the most effective way.
What are mortgage points?
Better known as discount points, are the fees which you pay directly to the lender at closing in exchange for a reduced interest rate. One point of the mortgage point makes up one percent of your total loan. The longer you are planning to own the home, the more points help you save on interest over the life of the loan.
Why mortgage points calculator?
One of the common questions that people get is whether to pay for discount points or not. Mortgage points do not come for free, there is a fee, and to buying, points will lower your mortgage loan. So, is it really worth it?
If you start using mortgage points calculator, you will be clear with all these doubts. Depending upon the type of loan you have, the calculator will show you how much you can save in interest costs over the length of time and also helps in calculating the break-even point where your interest savings and equity exceed the cost of the points themselves.
How does it work?
Once you are done with applying for a mortgage, you will be offered discount points which can help you lower your Interest rate. You can generally go for one to three discount points. Once you have selected your option points, it gets listed on the official home transaction documents. Usually, one-point equals 1% of the total loan, but it can vary depending on the mortgage lender.
One of the essential terms if the break-even point. It is the point at which the interest you saved is equal to the amount you paid for mortgage points. A straightforward way to calculate this is to divide the cost of the mortgage points by the amount you’d be saving per month.
So, if you are also having mortgage loans and are having confusions while buying mortgage points. Then the available mortgage points calculator will help you determine whether you should pay for points or use the money to increase the down payment.