Ever ask yourself this question?

What’s better – to pay off the mortgage early or to save and invest more money?

My guess is that we’ve all asked this question at some point or another. 

Maybe you’re thinking about refinancing your mortgage and looking at how you could pay off your mortgage early.

Paying off the mortgage early is a goal that a lot of folks have and are committed to make happen!

But what is your mortgage payoff?

How much extra cash do you need to throw down on that loan to get to your mortgage payoff?

How much interest would you actually save?

How many years would you cut down on your loan with an early mortgage payoff?

Should you even try to pay off your mortgage early, or is it better to invest your money?

Those are the questions we want to look at today and I’ve got a great little calculator for you as well!!

Benefits to an Early Mortgage Pay Off

1. Peace of Mind – you can rest easy knowing you’ve got no liabilities!
2. Increase “Imputed Income” - This might be more of an ethereal benefit, but bear with me – Let’s say your mortgage payment is $1,200 per month. If you are in the 25% tax bracket, you have to earn $1,600 to net $1,200 after taxes.  So basically not having to pay $1,200 a month is like earning $1,600 tax free!
3. Increase Savings – once you’ve paid off your mortgage you can really start socking some big money away.
4. Increase Giving – without having a mortgage payment, you can use that money to help the needy, give to your favorite charities or increase the giving to your church.
5. Increase Net Worth – this is obvious here, but worth noting.  Net worth is simply everything you own minus everything you owe.  Take away the liability and your net worth increases dramatically, which is creating wealth!
6. Increase Freedom – what I mean is that you no longer have to work just to maintain your liabilities, but rather having no mortgage or no debt frees you up to pursue things like your passions and your purpose!

So, as you can see there are some pretty big advantages to knocking out that mortgage!

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Concerns With An Early Mortgage Pay Off

1. Opportunity Cost – If your mortgage rate is only 5%, but you can get 8% in the market, you are giving up 3% by paying off your mortgage.
2. Lack of Liquidity – Instead of building up an account (whether a non-qualified brokerage account or a Roth IRA) that you can access should you need it, your money will be tied up in the equity of the home.  Sure you can get access through a home equity loan, but you have to pay interest on that.
3. Missed Tax Advantages – You can’t write off mortgage interest if there is no mortgage interest.

Those are the three main concerns I see with paying off your mortgage early.  Maybe you can let us know of some other concerns or disadvantages to paying off the mortgage early.

Instead of just choosing one way or the other, maybe you want to pay off your mortage AND invest like Nickel is doing from Five Cent Nickel!

Mortgage Payoff Calculator

So maybe you’re wondering what it would take for an early mortgage payoff?  How much would you save by paying the mortgage off. 

Here’s is a handy Mortgage Payoff Calculator compliments of MortgageLoan.com.

Check out ChristianPF for some advice on how to pay off your mortgage early?

You Also Might Be Interested In These Calculators

• Mortgage Refinance Calculator
• Credit Card Payoff Calculator

What Are Your Thoughts?

Readers, what do you think – should you pay off your mortgage or invest?

How many years would you trim on your mortgage by re-doing your budget and throwing some extra cash on that loan?

Should I Refinance My Mortgage?

That’s the question we want to answer today.

Mortgage rates are still very, very low.  Who would’ve ever thought we’d see mortgage rates this low for this period of time. 

I remember thinking back in August when we first started building our house and mortgage rates were at their lows that we’d never see those rates by the time we got our home mortgage loan.

But to my surprise we ended up getting a 4.875% rate even with a 60-day lock!  I was ecstatic!

Mortgage rates are still very competitive and so if you haven’t taken advantage of a mortgage refinance, you may want to seriously consider it soon – before mortgage rates start going back up again!

But, is refinancing your mortgage a smart thing to do?  What is you don’t plan to stay in your current house forever?  Should you still refinance?

These are good questions to ask!

Thankfully there are handy mortgage refinance calculators that can help us make decisions like this.

Here are some things to consider when refinancing your mortgage, and then I’ve attached a mortgage refinance calculator that I found on mortgageloan.com.

What is Your Current Mortgage Rate and What New Rate Could You Get?

What is your existing rate on your mortgage?  Where are rates at now in the open market? 

Here’s where rates are at today:

Or, to get an idea of mortgage rates in your state, check out GoBankingRates.com, which allows you to choose your state and the mortgage amount and compare rates in your area.

If you can drop your rate by at least a percent or more, you’ll want to seriously consider a refinance.

How Long Do You Plan to Stay in the House You are Refinancing?

Are you only planning on staying in your existing home for another year or two?  Maybe you’ll want to hold off on the refinance!

If you plan to stay a little longer, then the closing costs may not be as bad as you look at your break-even point.

Have a good idea of your time frame so you can make a more educated decision on whether the costs of refinancing your mortgage will be worth it.

What Type of Mortgage Loan Do You Have Currently?

Do you have a 5-year Adjustable Rate Mortgage (ARM) that’s about to expire?  You may want to refinance very soon and get a fixed-interest loan!

Do you have a 30 year mortgage and you’d like to get that down to a 15 year mortgage? 

The difference in rates may allow you to do that without adding much more to your payment.

What Is Your Home’s Value and Can You Get Rid of PMI?

With the real estate crash that we’ve seen the last couple years, it doesn’t always make sense to refinance.  Decreasing home values have made it difficult to really make sense of the numbers in many cases.

But, you’ll want to know what your home’s value is and if you can get rid of PMI if you are still paying it. 

PMI is private mortgage insurance that lenders typically charge if your loan-to-value ratio is not quite 80%.  If you have paid off a chunk of your mortgage and think your loan-to-value is at least 80% then you may want to refinance so you can get rid of that pesky PMI!

Mortgage Refinance Calculator

Check out this handy mortgage refinance calculator and determine if a mortgage refinance is right for your situation!

You might also be interested in this Credit Card Payoff Calculator!

What Are Your Thoughts?

Readers, have you refinanced your mortgage recently?

How did the process go? 

What tips would you offer other readers to help them through the mortgage refinancing process?

Questions for First Time Home Buyers

Don’t put one of the biggest financial decisions of your life at jeopardy by getting the wrong advice when finding a first time home buyer loan.

For many first home buyers, this can waste both time and money as they end up choosing the wrong loan for their hard earned deposit.

This guide will provide valuable information on finding the deposit for your loan and how to choose the best first time home buyer loan available.

How Much of a Deposit Do You Need for Your First Time Home Buyer Loan?

With so many first time home buyer loans available, there are even options for buyers with no deposit!

Despite this, with a bigger deposit you can take advantage of a greater selection of first time home buyer loans and find the most competitive interest rate while reducing the start-up fees.

Put more money down and you can receive lower interest as the provider does not have as much at stake and recognizes you as a low-risk customer.

Working hard to build up a good deposit can also let you avoid Private Mortgage Insurance or PMI.

Many lenders will insist that customers take out mortgage insurance if their deposit is less than 20% of the purchase price.

For first home buyers this can add up quickly, with insurance often costing up to 2% of the loan.

To put this in perspective if you were to take out a loan of $250,000 you could potentially be forced to pay a whopping $5,000!

Many lenders will make an exception for first home buyers as they realize the difficulty of saving for a 20% deposit and will offer first time home buyer loans up to 95% of the property value.

This has resulted in a high number of competitive 95% loans on offer with great features for first home buyers.

By being offered a greater selection of first time home buyer loans and being given the ability to take luxury in more competitive interest rates and features, buyers with a 20% deposit are generally in a better position than those without a deposit to offer.

However, with good first time home buyer loans on offer for those with smaller deposits saved, you can still find a loan with the right features to help you make the transition from renting to buying.

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How Do You Find the Best First Time Home Buyer Loan?

While it may be tempting to base your loan decision on the interest rate alone, it’s vital that you also take into the consideration the different features for each loan based on your unique financial situation and goals.

By not taking advantage of the right features, you can easily pay far more than is necessary.  This generally comes down to weighing up the interest rate and the flexibility of the options available.

Every first home buyer should consider these questions when comparing different first time home buyer loan options:

• What are my first home goals?
• What are my spending habits?
• Am I capable of budgeting?
• Am I eligible for the first home owners grant?
• How might my stream of income change in years ahead?
• Will I be able to manage a loan with ongoing fees?
• What are the exit fees of this loan?
• Does this loan offer portability?
• Does the loan offer redraw facility?
• If ahead in repayments, can I stop making deposits for period of time?
• Can I see myself moving in the next 5-10 years?

Your answers to these questions can greatly influence the loan you decide to go with.

Your first time home buyer loan should save you both time and money but also offer flexible options to ensure you aren’t struggling to make repayments down the track.

How Do You Choose the Right First Time Home Buyer Loan?

Comparing first time home buyer loans on the market can often seem overwhelming with many buyers unsure as to what loans will let them take advantage of a good interest rate while still giving the right features for their home loan needs.

You can make the process much easier by following these three simple steps:

1. Decide what your loan should offer based on the questions above.
2. Find the products on offer from the different providers that meet your criteria and create a shortlist.
3. Once you have your selection of first time home buyer loans, examine each one closely to make your final decision. Don’t be afraid to do extra research and seek advice. Remember this is one of the most important decisions you will ever make.

By following these three steps you can find the best first time home buyer loan for your specific needs. The loan you decide to go with should help you achieve both your short and long term goals.

With thousands of first time home buyer loans available, the hardest part is sorting through all of the competitive deals to find what is best for you.

Reward yourself now and in years ahead by following the necessary steps to get the best first time home buyer loan possible.

This has been a guest post by Fred, who is a personal finance writer. He provides budgeting tips and helps people to choose the best first home buyer home loans online.