Our mobile site is optimized for smaller screens.

TRY IT NO THANKS

Financing

Is Overpaying Your Mortgage a Good Financial Strategy?

Most people pay the minimum amount due each month toward their mortgage, taking either 15 or 30 years to pay off the loan, depending on the original terms. However, if you can afford to pay more—even just a small amount—it can make a big difference in your finances.

Sending the Extra Money
One way to pay more money toward your mortgage is to slightly increase your monthly payment by $20-50. Simply add this amount to your check or online bill payment. This method is ideal because it allows you to be more flexible; for example, if you need that extra money for an unexpected expense, you're not committed to paying it toward your mortgage.

Another method you can use to pay more money toward your mortgage is to set up biweekly payments. In this scenario, you pay half of your mortgage every other week (this method is especially ideal if you are paid biweekly). Paying biweekly results in a full extra payment per year (26 half-payments per year equals 13 full payments).

It's important to note where the extra money goes when you overpay your mortgage. Each mortgage plan applies this money in different ways, which produces different results. If you apply the extra money to your principal balance, this helps you pay off the mortgage faster. However, some companies apply the extra money toward your next payment only, which means that you'll pay off the same amount of money over time. You should be able to tell the company where you want to apply your money, but don't assume that they're doing what you want.

Effects of Overpaying
When you pay extra toward the principal of your mortgage, you are decreasing the total amount of interest that you pay over the lifetime of the loan. Traditionally, when you make your payments during the first few years of the mortgage, the bulk of your payment goes toward interest rather than principal. Paying extra each month can save you thousands of dollars on your total cost over the full term of the loan.

Prepayment Penalties
One potential negative effect of overpaying your mortgage is having to pay a prepayment penalty. Certain mortgages have this type of clause to protect the bank from losing money. If you pay your loan off too quickly, you may have to pay extra money to the bank. It's usually still less than what you would have paid if you followed the loan terms. Check with your mortgage company about its policy on prepayment penalties.

What Americans Want In a Home: The Housing Satisfaction Gap

In a recent survey conducted by the Demand Institute, 10,000 households were asked if their current homes met their lists of must-haves. The survey found that many homeowners are going without some important features. Home buyers and renovators should take heed; these are the features that should be on every must-have list.

Energy Efficient ?
Spending on home electricity has climbed 56 percent since 2000, leading 71 percent of households to think energy efficiency is important. Yet only 35 percent are satisfied with their own home's energy efficiency. Homeowners are making simple improvements to save on energy, like changing bulbs to LEDs and sealing leaks around windows and doors.

Move-In Ready?
Since 2010, Americans have been spending more on home renovations-smart investments, since 67 percent of those surveyed felt a fully renovated home was important. Only 41 percent were satisfied with the repairs done on their own home; when asked which jobs they will be likely to tackle over the next five years, painting and replacing worn flooring topped the to-do list.

Upgraded Kitchens
Of all the rooms in a home, the kitchen comes out on top, with 62 percent of households declaring it an important space in their homes. Yet only 38 percent of households are happy with their current kitchens. Top-of-the-line appliances seem to be on many must-have lists, with 49 percent of homeowners thinking about purchasing a smart appliance.

Space and Privacy
Whether it's space around a home to afford a little privacy from neighbors or space inside a home for more storage, homeowners want more room. Privacy was important for 63 percent of the surveyed households, but only 42 percent were satisfied with the distance between their house and the neighbors. And while 55 percent felt storage space was important, only 35 percent felt they had enough room in their closets. Over the next few years, large single-family homes in suburban communities are expected to grow in popularity to meet the demand for more privacy and space.

Age-In-Place
Over the next five years, the number of households helmed by someone over 65 is expected to grow exponentially. These aging buyers place a greater emphasis on single-story, low-maintenance homes with accessible features. But many households feel their homes won't be compatible with their aging bodies; 76 percent think aging-in-place is important, but only 53 percent are satisfied with their home's ability to meet their future accessibility needs.

Good Investment
Despite the recent housing crisis, 65 percent of households still think a home is a good long-term investment. However, only 47 percent are happy with their current home, a group largely made up of renters; 53 percent of renters hope to purchase a home one day.

Spread The Word: Mortgage Rates Below 4%

DAILY REAL ESTATE NEWS | FRIDAY, NOVEMBER 21, 2014

Fixed-rate mortgages fell back near yearly lows again this week, lowering borrowing costs for home buyers and refinancers. The 30-year fixed-rate mortgage averaged 3.99 percent this week, Freddie Mac reports in its weekly mortgage market survey.

"If you are planning to buy a home in the next year, it's better to do it sooner rather than later," Frank Nothaft, Freddie Mac's chief economist, said in the video commentary embedded here.

Freddie Mac reported the following national averages with mortgage rates for the week ending Nov. 20:

  • 30-year fixed-rate mortgages averaged 3.99 percent, with an average 0.5 point, dropping from last week's 4.01 percent average. The 30-year fixed-rate mortgage dipped to 3.97 percent in mid-October, its lowest average so far this year.
  • 15-year fixed-rate mortgages averaged 3.17 percent, with an average 0.5 point, decreasing from last week's 3.2 percent average. A year ago, 15-year rates averaged 3.27 percent.
  • 5-year hybrid adjustable-rate mortgages averaged 3.01 percent, with an average 0.5 point, falling slightly from last week's 3.02 percent average. A year ago, 5-year ARMs averaged 2.95 percent.
  • 1-year ARMs averaged 2.44 percent, with an average 0.4 point, inching up slightly from last week's 2.43 percent average. Last year at this time, 1-year ARMs averaged 2.61 percent.

Source: Freddie Mac

Preferred Properties

  • 147 Knight Lane
  • Williston, VT
  • 05495
  • Phone
  • Meep.
  • Fax
info@preferredpropertiesvt.com