Nabil Patel Speaks - Understanding Home Loans Before Paying Them Offby Dynamix Group Writer
Once you have bought your dream home, the biggest dilemma that you are likely to face is whether you should pay off the debt early or not. This also compels some people to save extra each month to be able to clear off the mortgage early. Then there are others who would rather consider paying off the home loan at once as the best option or follow the EMI schedule to settle the complete amount. If you go by the lump sum option, you must know the pros and cons related to paying off the home loan early.
Mortgage, according to some people, is one of the many financial goals. Prioritizing such goals is not always as difficult as it seems. The home loans come at cheaper rates as compared to the interest charged on your credit cards. Under such circumstances, it’s always better to clear off the credit card bill earlier. If you are married, you might wish to keep some funds for your child’s education or other needs. Although owning a home is an achievement in itself, many people face emotional issues while paying off the mortgage. Since all the available cash might be utilized, you must carefully analyze whether or not you must pay off the loan early. Whether you are planning to invest in premium properties by companies such as Nabil Patel DB Realty or any other, there are certain things that must be kept in mind when paying off the mortgage-
Other Debts That You Might Have
While managing your finances, make sure to keep home mortgage as the last debt that you pay. Since such loans have a lower rate of interest as compared to other types of loans such as car loan, personal loan, etc., the latter must be paid off earlier. If there are second mortgages and lines of credits, they need to be tackled at the onset. As a thumb of rule, keep those loans which have a higher rate of interest on top of your priority list. Once you have paid off all other loans, the home loan can be cleared off.
Maintain an Emergency Fund
There must always be enough money kept aside to cover the expenses that arise during emergency situations. By paying off the mortgage early, you are blocking this amount. Therefore, before you decide to pay off the loan amount, it must be made sure that you have the adequate amount at your disposal which can be utilized during emergency situations. Liquidity factor must also be taken into account while dealing with funds. Since a lot of cash goes into paying off the loan, fund constraints might arise when you actually require the amount. This is one of the main reasons why people prefer to go by the EMI schedule. Investing smartly can help optimize cash flow and lets you enjoy more financial freedom.
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Created on Jul 19th 2019 06:09. Viewed 276 times.