First let me say that I am not an expert on loans and finances. I read everything I can get my hands on but it doesn’t make me an expert. But many years ago I made poor choices and I’ve been working since then to correct my credit and become debt free and I’ve made fantastic progress. This post is just meant for food for thought. You should always consult a professional when it comes to these choices. I’ve found that each expert has their own method. I ended up piecing together advice from several experts to find things that worked for me and my family.
Have you ever gone through the fine print of a loan? It’s all written in legal jargon with conditions, terms, penalties, etc. It’s kinda scary really. While reading the fine print of a loan may not be enjoyable reading after a day of work, it’s important. Do you know some lenders will actually penalize you for paying off a loan early? Did you know that just buy paying $20 or so a month extra on your mortgage or car loan can shave months or even years off your loan? We initially had a 30 year mortgage by us making one extra payment a year it would cut our payment time down to 22 years instead of 30. Of course you know that saves money with interest and equity in your house.
It’s important to know the terms of your loan. After paying on it for a while you may wonder if you’ll get get a better deal refinancing. You want to look at the fees to refinance, the percentage rate available, and your payment options. My husband has near perfect credit. We looked at 3 different lenders. We got a rate from one lender that was pretty good. We decided to try a lender we were already working with for our vehicles. Turns out we got an even better rate from them. The refinance helps us pay our house off now in 15 years. We pay 1/2 of our mortgage every 2 weeks. That means that twice a year we make an extra half payment. So one full extra payment a year. That one extra payment a year is now turning our 15 year mortgage into about a 13.5 yr mortgage. That’s not to say it’s always a good idea to refinance.
There are a lot of factors that can change the outcome: lenders fees, interest rates, number of years you’ve been paying on your current loan, debt to income ratio, credit score, are just a few things that can effect the results of loan searches.
There are plenty of experts to find out more too like Dave Ramsey, Suze Orman, etc. And tons of finance books and magazines out there. One book I found very helpful and easy to understand when it comes to mortgages was “Mind Your Own Mortgage” by Robert Barnabe
This post is sponsored but post is written by me
Good advice Angie. I’m kinda thinking about refinancing my car loan because it’s really been tougher than I thought it would be buying a new car a little over 2 years ago. Every single penny I’m making right now is going towards bills, food, and gas. There’s not much left for fun, which is depressing.