Mortgage Free

It may be an all too common belief that a person will have a house payment and a car payment for the rest of their lives.  However, with a plan and some determination, you can be mortgage free.

Planning for retirement is obviously important and many times, an activity plagued by procrastination.  Some homeowners’ goal is to have their home paid for by retirement, so they won’t have payments.  It makes sense to eliminate a sizable recurring expense before they quit working.

By making regular principal contributions in addition to the payments, the debt can be eliminated by the target retirement date.

Assume a homeowner refinanced their $300,000 mortgage at 4% last year for 30 years with the first payment due on May 1, 2017.  With normal amortization, the home will be paid for at the end of the term.

Additional principal contributions with each payment will save interest, build equity and of course, accelerate the payoff on the home.  An extra $250.00 a month would pay off the mortgage 7.5 years sooner.  $786.81 extra with each payment would pay off the loan in 15 years.

Having a home paid for at retirement has the apparent benefit of no house payment.  A debt-free home is also a substantial asset that could be borrowed against or sold if unanticipated events should occur.

To make some projections to pay off your own mortgage, use this use the Equity Accelerator calculator.

3 Strategies for Winning the Bidding War

“Bidding War” — it can be an intense and scary term for something that isn’t actually a war at all. Rather, it’s simply your homebuying strategy vs. competing strategies to win the home you want to call yours.

Today’s market is competitive and bidding wars are not uncommon. In fact, in 2017, nearly one in four homes sold for more than asking price due to buyers out–bidding each other.

So, how do you “win” this war? There are different strategies that have proven effective over the years, some more challenging than others, but all worth consideration.

  • Get Pre–Approved. By having a pre–approval letter from your lender, you’re telling the seller that 1.) you’re a serious buyer, and 2.) you’ve been pre–approved for a mortgage by your lender for a specific dollar amount. In a true bidding war, your offer will most likely get dropped without one.
  • Get Emotional. Break out your pen and write an emotional “Dear Seller, Pick Me” letter.  This strategy has proven to be effective, increasing your odds in some markets by more than 50%. Emotions play a big role in “home sweet home” and your letter puts a live person, and a serious buyer, behind the transaction.
  • Get Cash. In real estate, cash is undoubtedly king and an all–cash offer can more than double your chance of getting the home. This is because all–cash offers are far more streamlined with far fewer possibilities of falling through. However, this tactic is unrealistic for most families, so back to #1 and #2.

Because every local market and seller’s situation is different, you’ll want to rely on your real estate agent’s professional advice. Also, be sure to visit My Home by Freddie Mac® to learn more about the homebuying process, from soup to nuts.