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With mortgage interest rates at historical lows in recent months, homes are flying off the market and millions of Americans are becoming first-time homeowners. For most, their home will be the most valuable asset in their total net worth, but while a home is generally a sound and smart investment, those mortgage payments can be a cumbrous liability. Unaffordable mortgages and foreclosures can lead to bankruptcy.
See: The Fastest Ways To Pay Off Your Mortgage
More Tips: How To Significantly Pay Down Your Mortgage in 12 Months
Most lenders offer, at minimum, a 15-year mortgage, though the most popular option is a 30-year loan. Those who’d like to cut that timeframe down, and pay the mortgage off in only 10 years, should consider making the following expert moves.
Get the Right Mortgage
If you’ve yet to own a home but are about to lay down an anchor with the goal of paying your mortgage down in 10 years, your first step should be to obtain the shortest term you can find, which in most cases is going to be 15 years.
“Don’t worry about discount points,” said Ann Martin, director of operations at CreditDonkey. “You’ll be paying extra each month anyway, meaning that you won’t get the full benefit of the point since you won’t be dealing with the full life of the loan. Once you’ve got a short-term, low-interest mortgage locked in, the next step is to monetize your home as much as possible. Take full advantage of any tax deductions, energy efficiency credits, and other programs available in some cities and states that will reimburse you for certain repairs and renovations.”
See: Here’s Where Home Prices Are Headed in 2022, According To Experts
Get a 30-Year Mortgage — With Investment in Mind
“Get a 30-year mortgage and invest the difference between a 30-year mortgage and a 10-year mortgage,” said Khari Washington, broker and owner of 1st United Realty & Mortgage. “The stock market averages a higher return than the interest rate on a mortgage. A homeowner could invest the difference between a 30-year payment and a 10-year payment into the market and then take the invested amount and pay off the loan at the end of the 10th year.”
See: 30-Year Mortgage vs. 15-Year Mortgage — Which Is Best for You?
Build a Budget Around Your Goal
“A budget can help a homeowner understand exactly how much he or she can afford in home payments every month,” said David Frederick, director of client success and advice at First Bank. “If the homeowner can afford to do so, it …….