Royal-rumble Purchasing a home is one of the most major investments a person or family can make during their lifetime. This is because most of us can not afford to pay for a house with cash, rather we must borrow from a bank or lender to secure the home or investment property of our dreams. Today we will cover how to make an informed decision about taking on such a large debt, and how to pay it off quickly. We want to own the property, not have the property own us. The art of the dealThere is various options to consider when purchasing a home.
The lending agreement is dense with legal jargon and difficult to understand numbers and mathematical equations concerning principal payment and interest. The important thing to understand is that these two concepts hold an inverse relationship – the less you put down initially means the more you will pay over the life of the agreement.
The key to avoiding it is to select the agreement where the homeowner pays the least amount of interest possible. Generally, this means a larger down payment than most people are comfortable with, but it is without a doubt the smartest decision.
It’s important not to stress during this time! Whether you realize it or not this is an investment, so don’t be afraid to put down the most you can afford. In the end, this will ensure that you pay less to own the property/home and over the lifetime of your agreement, you will certainly recoup this investment. With smart money management, you put yourself in a position to profit from the deal. Remember, real estate is the one thing they are not making more of. Managing your paymentsMost payments are constructed so that property owners pay down the interest.
This is another pitfall that awaits buyers. They key is to pay off as much as is manageable, this means working against the principal amount that was borrowed. Unfortunately, this typically means sacrificing a bit of the lifestyle and creature comforts that most of us dream of. However, it is important to keep your end goal in mind. The goal is to own this property; to secure this investment and make your money work for you.
Generally speaking, making larger payments is something we all avoid, but the payment is inevitable. The price will certainly be higher if you pay the smallest amount possible towards your mortgage. This is what the lending company wants! Don’t fall victim to this mindset.
Budgeting your lifestyle key to making payments your friend instead of your enemy is budgeting. Sit down and list out your expenses. Once they are written down, the areas that need to be cut back on will become clear. For example, if you buy coffee every day on the way to work or buy lunch every day at break time then this is an area you can cut back on. Let’s face it, it’s not as comfortable, most of us feel like we need our iced coffees to get the day started, but it is necessary. Make coffee at home instead or pack your lunch to avoid spending excess money that you can use towards your mortgage.
Eliminating these small extras in our daily routines allows extra money to use towards mortgage payments. It takes a bit of getting used to, but this is key in making larger mortgage payments. The 1%The mindset to adopt is that by securing a higher monthly payment you will effectively be putting your money to work. This is the mindset of an investor. The 99% work for their money, the 1% make their money work for them.
The simple formula the end there is no magical formula to make the dream of owning a home reality. Once you purchase a home or property that bill will follow you until it is paid off. It will grow and increase in size the longer the debt exists. The key to cutting this down works hard and pay it down as quickly as possible. There is no legal jargon or mathematical formula that can take away from this reality. Working smart is putting your money to work for you. It’s not always easy but eliminating your mortgage as early as possible pays incredible dividends to the future we all dream of.
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