Mortgage alternatives for more money
After maximizing your retirement plan, you may have funds left over. Here are some ways to put that money to good use for your mortgage:
With a mortgage overhaul, borrowers can make a lump sum payment on the principal balance of their loan. This allows them to lower their monthly mortgage payments. This also changes their repayment schedule. However, the terms of the loan and the interest rate remain the same.
There are different rules for a mortgage overhaul, and each lender will have their own version of these rules. However, most lenders will require a payment of at least $5,000 for a mortgage overhaul.
You make extra payments on your mortgage to help you pay off your loan sooner. Some owners choose to do this on a regular schedule and with a consistent amount of money. Others can do it as they can with the extra funds they have. The best option for you will simply depend on your financial situation.
However, if you want to try this, be sure to let your lender know. Let them know you want the funds to go straight to your main balance, not interest.
Refinancing at rate and duration
Rate and term refinancing is a way for borrowers to obtain better loan terms. Essentially, you can trade in your current loan for a new, different mortgage deal. This works best if you’re having trouble repaying your existing loan or if interest rates are lower than when you first borrowed.
All you have to do is take out the new loan, use it to pay off the rest of your first loan, and then start paying off the new mortgage after refinancing. This opens the door to a shorter loan term or lower monthly payments.