![]() 3 Things You Must Do When Your Savings Reach $50,000.Learn To Master Your Money With These Financial Tips.PMI usually costs between 0.5% and 1% of the mortgage loan amount each year - which equals money you could be adding to your mortgage payment. When you take out a conventional loan and opt for a down payment of at least 20%, you can avoid having to pay PMI. The key is to put down a minimum of 10% or as much as you can to reduce the amount you’ll need to finance. Maximize Your Down PaymentĪlthough Ramsey is an advocate of buying a home with 100% down, not everyone can wait to gather the total amount they need before purchasing a home. The ELPs in the network promise to help you save time and money, so you won’t have to worry about being pressured into buying a home that doesn’t fit your budget. Ramsey’s nationwide Endorsed Local Provider network can help you find a local real estate professional you can trust. Instead, you choose to rely on the expertise of real estate professionals who can help you find the perfect home and negotiate the price on your behalf, so you can be confident you’re getting the best deal possible. Can I afford to pay the utility and maintenance costs as long as I own the home?įinding a home on your own takes time and energy.Can I afford to choose a 15-year, fixed-rate mortgage?.Is the house payment no more than 25% of my net salary?.Will I be able to pay the closing costs and moving expenses with cash?.Am I free of debt with three to six months of living expenses saved?.Ramsey recommends that you be able to answer all of these six questions with a “yes” before committing to a mortgage - otherwise, you should wait to purchase a home: Don’t Bite Off More Than You Can Chewīeing financially ready to take on the cost of homeownership is paramount. ![]() The only advantage of the VA house loan is that you don’t need a down payment, which Ramsey considers a trap.Īdvice: 5 Things You Should Always Pay For With Cash 5. They’re usually more expensive than conventional loans, according to Ramsey. Ramsey doesn’t recommend that house hunters seek VA loans, which are backed by the Department of Veterans Affairs. In any event, you’ll have successfully reduced your debt. You might be able to pay cash for a new house, and even if you do need to get a mortgage, it will likely be small - and a smaller balance means you can pay it off sooner. Downsize Your HomeĬonsider selling your home before paying it off - if you have enough equity in it - and using your profits to buy a smaller, less expensive one. Either way, you’ll have more money each month even sooner to invest for retirement, save for college or put toward some other goal. Or, if refinancing your 30-year mortgage isn’t feasible, pay toward your mortgage like it’s a 15-year mortgage. Once you get into that 15-year-mortgage, increase your payments, if possible, to pay it off in, say, 10 years. Not only will you pay off a 15-year mortgage in half the time, but you’ll also pay much less in interest. One recommendation Ramsey makes is to convert your 30-year mortgage into a fixed-rate, 15-year home loan. The Dave Ramsey mortgage plan encourages homeowners to aggressively pay off their mortgages early, however. Low-interest rates might make it tempting to stretch out your payments over the course of the entire loan. Add that $90 per month you spend on Starbucks to your mortgage payments, and you’ll save $25,000 in interest and reduce your loan by four years. You’ll also save more than $28,000 in interest.Īnother way you can put more money toward your mortgage, according to Ramsey, is to remove your daily coffee shop stop - which can really add up. Bring Your Lunch to Workīringing a brown-bag lunch to work every day isn’t exactly glamorous, but it will save you money you can put toward paying down your mortgage - to the tune of $1,200 a year - and, using the same example mortgage as before, enable you to pay it off three years early, according to Ramsey. Take Our Poll: What Do You Plan To Use Your Tax Refund For? 2. That little bit extra will save you from paying more interest than you have to. When you can’t afford that extra payment, just round up your payments so you’re paying at least a few extra dollars each month, and increase your payment when you get a raise or bonus.This bi-weekly payment schedule adds up to one extra payment each year, saving you $24,000 and four years off your mortgage. Divide your payment by 12 and add that amount to each monthly payment, or pay half of your payment every two weeks.Make one extra payment each quarter to shave 11 years and nearly $65,000 off your mortgage.Here’s how extra payments would affect a $220,000, 30-year mortgage with a 4% interest rate:
0 Comments
Leave a Reply. |