The tough part might be over after your mortgage has been approved, but it’s still important to keep on top of your monthly payments and maintain a good credit score for your financial future. If you’re currently wondering how increasing your mortgage payments can help your credit outlook, here are some things to consider.
Change Your Payment Schedule
Most people opt for a monthly mortgage payment, which can certainly stretch the budget but is still something that can be maintained consistently. However, what many homeowners don’t realize is that more consistent payments, like a bi-weekly or even weekly payment, can actually pay down the principal that is owed on your home. While this may seem like enough of a benefit on its own, this will also lower the interest you pay on your investment and will mean financial freedom much more quickly!
Make A Lump Sum Payment
Whether you’ve come into an inheritance or received a bonus at work, making a lump sum payment on your mortgage can be a great way of minimizing your interest and improving your overall credit. There are often limitations on the amount of money you can put down, but by adding an additional payment to the amount still owing on your mortgage, you might be surprised by the money savings and the boost to your financial profile.
Limit Your Amortization Period
25 years may be the standard amortization period for a mortgage, but longer is not necessarily better when it comes to your biggest investment. While you won’t want to push yourself too much if your monthly mortgage payment is already high, if you have the financial wherewithal to make a higher payment, it may be worth it for owning your home a little sooner. A shorter amortization period may seem like it will significantly bump your monthly mortgage, but by re-tooling your budget you can get the benefit to your credit score without sacrificing your monthly expenditures.
For many people, it is a month-to-month challenge to stick to their budget and make the monthly mortgage payment, but there are benefits to putting down more than expected. Whether you come into a lump sum amount or want to pay on a bi-weekly basis, extra payments can help to improve your credit and make your investment yours much sooner. If you’re currently in the market for a home, contact your trusted mortgage professionals for more information.Share
About the Author:Babak Moghaddam graduated from University of Southern California in 1985. He entered the mortgage industry as a compliance auditor at the Bank of New York in 1986 and completed his masters in Business Administration two years later. After seventeen years in the traditional mortgage banking world Babak finally transformed this vision into his own practice in 2002 when he formed Charter Pacific Lending Corp, a mortgage company that has provided over $900 Million in residential real estate loans throughout Southern California. Babak and his team do things a little differently than other mortgage providers. They work as financial advisors, because they have come to realize that a mortgage is a very powerful financial tool. And just like any other financial tool, it should be managed as part of the overall financial management plan to reach every home owner’s long and short-term financial goals much faster. You can contact Babak for a free consultation and strategy session at (800) 322-1217 X103.