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Planning for a Bright, Financial Future

When I married my husband, I was impressed at how financially prosperous he was. While he didn’t attend college, he landed his dream job with a successful railroad. At a young age, my spouse invested heavily in railroad stock. He also started contributing to an Individual Retirement Account, more commonly referred to as an IRA. Have you recently begun working full-time for the first time in your life? Consider planning for a bright, financial future by starting an IRA. Depending on your personal preferences, a traditional, a non-deductible, or a Roth IRA might work best for you. On this blog, I hope you will discover the benefits of consulting with a financial adviser before starting your first IRA.

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Planning for a Bright, Financial Future

Three Reasons Why You Should Pay Off Your Mortgage Faster

21 January 2018
 Categories: Finance & Money, Blog

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Having a mortgage is a natural part of adulthood. Very few people can buy a home outright, since it takes forever to collect that much money. However, if you suddenly become more successful, you should pay off your mortgage twice as fast. Here is why.

Greater Equity

The portion of your home that you own free and clear is your equity. If you only owe $66,000 more on a $99,000 house, you have $33,000 in equity. The more mortgage you pay off, the more of your home you own and the more equity you have. If you pay your mortgage off completely, all of your home's value and property becomes your equity, and that plays a very big part in a home equity loan.

Home Equity Loans

You cannot get a home equity loan unless you own some portion of your home free and clear of a mortgage. If you spent all of your new financial success on paying off the mortgage, guess what? You not only own your home outright (which is exciting enough!), but now you have all of that equity in your home to borrow against. While it certainly is not advisable to pay off your mortgage just to borrow it all back, you now have the ability to borrow what you need, when you need it, with the equity in your home.

Lower Equity Loan Interest

Paying off your mortgage so that you can borrow some of the money back in the form of an equity loan does have its advantages. One of these advantages is that your credit report reflects the fact that you have no debt against your home and the mortgage has been paid. This increases your credit scores and your lending worthiness. It also means that you will get a lower interest rate on any equity loan you choose to borrow in the future.

Just make sure you leave six months' time between the mortgage payoff and the equity loan application. It may take that long for the mortgage payoff to be reported to the credit bureaus. The bureaus do not always log this information in your credit records right away either. If you do not need an equity loan right away, but you know that you will need one about a year from now, it is in your best interests to pay off your mortgage now so that you can apply for a loan later.