You need to build equity in the house quickly if you’re to enjoy the homeowning experience, explains a residential mortgage loan expert. Rushing through the home buying process increases your chances of making costly mistakes. Such errors are likely to saddle you with an expensive mortgage, making it difficult to build equity quickly.
See, high-interest rates only serve to increase the cost of the house, slowing down the pace of building home equity. You want to ensure that most of the money your pay goes towards amortizing your loan.
1. Negotiate From a Powerful Position
Make no mistake; the mortgage process is a battle of wits, one that you can’t afford to lose. The lender is out to make as much money from their investment in you, but you have the power to dictate terms. As with any business transaction, you must bring something worthwhile to the table to merit good terms.
In this case, you need to demonstrate that you are a creditworthy individual with excellent finances. You need to ensure that there’s a single red flag in your financial history as that would ruin your chances of success. Clean up your finances and fill your credit history with good debt while keeping your credit score above 700. That way you can negotiate down the interest rates on the loan.
2. Make an Extra Payment
Some lenders are okay with you making an additional payment in a bid to offset your loan early, while others might impose a penalty on it. Therefore, it is essential to check with your lenders to be sure that you’re doing the right thing. When you make an extra payment, make sure it goes towards paying off the principal amount. Reducing the amount you owe on the home helps you to build equity.
To make the extra payment, you need to rustle up some extra cash by growing your income or just by good old-fashioned, frugal living. Brushing up your money management skill can help you channel most of your extra income towards paying off the mortgage loan.
The sooner you can pay off your mortgage loan, the sooner you get to build equity on it. Therefore, you should embrace any method that offers you a chance at making this a reality.