Accelerating and Recasting Your 30-Year Mortgage
It’s tempting to choose a 15-year fixed rate mortgage for a few reasons:
- It’s a lower interest rate than a 30-year mortgage
- It’s paid in half the time
- You build equity faster
There is, of course, one major trade-off: your monthly payment is significantly higher. Even if you can swing it, the extra cash you’re paying out each month can limit your ability to afford other items as needed: a new car, home repairs, health-related costs, unforeseen income interruption, etc.
For these reasons, a 30-year fixed rate mortgage is a safer bet. Yes, mortgage-for-mortgage, you’ll be paying a higher interest rate for a longer period, but your monthly payment will be significantly less, and that affordability makes it the more attractive option for most homeowners.
There are ways to pay down your 30-year mortgage faster. Accelerating your mortgage means you can pay more than your monthly obligation. You make your monthly payment and then pay more that month, with the second payment applied to reduce the principal balance of your mortgage. An extra $300 per month can typically cut months and even years off the length of the mortgage, saving you tens of thousands of dollars.
Another option is to recast your mortgage. Let’s say you get a large, unexpected bonus at work or win the lottery or inherit money from a long-lost relative. You could apply that money to your mortgage in a lump sum which will lower your monthly payment. Once the payment is made, your mortgage is recasted (i.e. recalculated) to reflect a lower monthly payment based on the new balance and reducing the interest you’ll pay over the life of the loan.
With options of refinancing, accelerating, and recasting, you may find yourself paying considerably less than you thought when you first purchased your home.
If you’d like to chat about mortgage options, please call me at 617-965-1236. If you’re planning to buy this year, let’s talk soon. I look forward to speaking with you.
Ready to buy a new home or refinance the one you own? Please get in touch and I’ll be happy to answer your questions and help guide you through the process. I look forward to speaking with you.
Daytripping in MA
Ready for a Day Trip or a fun summer weekend with friends and family? Don’t let August go by without hitting the road for a fun trip that’s local and doesn’t require a week away from home or work. Here are a few suggestions for Day Trips in Massachusetts!
Salem is an incredible experience in summer. It’s an amazing walking city, filled with history (Salem Witch Trials, Maritime Historic Site and the real-life House of the Seven Gables).
Go back in time on a day trip to Plymouth. See Plymouth Rock, step aboard the Mayflower II and visit Plimouth Plantation, a living history museum that replicates 17th century colonial life of the Pilgrims.
Head downtown and explore the history, architecture, food, and attractions that make Boston one of the country’s best walking cities. Whether you’re walking the Freedom Trail or cruising around the city streets (and waterways) on a guided Duck Boat tour, there’s so much to do and see for kids and adults.
Enjoy the summer and be sure to take some time to relax and recharge by getting away, even if it’s for one really fun day.
Home Improver: Rain Barrels for Water Conservation
This feels like the rainiest summer in years! Why not take advantage of all the wet stuff falling out of the sky? If you’ve never used rain barrels to gather water, there are several reasons to consider investing in them.
Rain barrels collect water from your roof that runs from the gutter, through the downspout, and into your rain barrel. The collected water can be used to water your lawn and garden. Other used include wash your car, filling a koi pond, or cleaning around the house.
According to the Massachusetts EPA, rain water is “soft,” meaning it is free from minerals and chemicals like chlorine, fluoride, and calcium, which are often found in tap water. Rain water is ideal for watering plants, washing cars and windows.
Owning rain barrels saves you money on your water bill and teaches your children about the importance of conservation.
Feeling in a DIY mood? You can build your own rain barrel.