Sometimes in life, we find ourselves in possession of a chunk of cash that we really weren’t expecting. Perhaps you have won a small fortune on the lottery, maybe you have received an inheritance, maybe you have earned a bonus at work or received a tax refund or perhaps you have obtained a settlement in a lawsuit.
For whatever reason, you now have a large chunk of money to use however you please. Rather than splurging on luxuries, you might be considering putting this money to good use so that you can be in a better financial situation. Should you put it toward paying down the mortgage on your Oregon property?
The Power Of The Lump Sum Payment
One of the main reasons that you should consider investing your windfall into your home has to do with the way that mortgage lenders calculate interest. The interest on your mortgage payment will be calculated each day as a percentage of the total balance that is left on your loan.
This means that if you are able to pay off a large chunk of your mortgage with your windfall, you will be charged much less interest over the coming years of the loan. This will add up to a significant savings over the lifetime of your mortgage.
Also, this means that it will take you less years to pay off your mortgage in full and you will be able to own your home a lot sooner than you planned for. Once your mortgage is fully paid off, this gives you relief from a huge financial burden so that you can use your money for different things.
Check With Your Lender First
Before you use your windfall to pay down the principal of your mortgage loan, check with your mortgage lender to find out whether you are allowed to make extra payments. Some mortgage lenders will not allow this and others will charge a fine if you make an extra payment. This is why it is a good idea to speak to the lender and clarify the terms and conditions of your home loan.
However, if your loan doesn’t accept extra lump sum payments you can always consider switching your mortgage over to one that does. For more advice on mortgages and any other questions regarding Oregon property, don’t hesitate to contact Cindy Schweikert either by email cindy@hartwest.com or call (480) 596-5151.
Licensed in Arizona, Colorado, Utah, Oregon, New Mexico, and Washington, we have had new and previous home buyers covered since 1997.
