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Innovative Mortgage Management Ideas for LGBT Homeowners

As the year comes to a close many LGBT homeowners are already planning ahead for 2011 and trying to figure out ways to save money as a New Year’s resolution. That’s never easy, especially in the midst of so much economic uncertainty, but here are two rather creative ideas that may help LGBT homeowners control or reduce their mortgage expenses and debts..

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Accelerated Mortgage Balance Reduction.

There are many ways to lower the outstanding principal balance on a mortgage loan, but most of them involve rather difficult austerity measures to free up extra monthly cash. There is, however, one method that can dramatically shorten the length of time it takes to pay off a mortgage without requiring any major financial adjustments or serious budgetary sacrifices. The approach primarily requires a little discipline and organization of one’s calendar – but once those resources are put to work this system usually works rather effortlessly..

  • The key to this accelerated mortgage payment plan is twice-a-month payments, but it is important to understand that the borrower does not pay twice as much. Instead the amount that is already being sent to the mortgage company is divided in half, and sent in two equal installments spaced two weeks apart.
  • A monthly mortgage payment of $1,200 is normally paid, for example, with one check or withdrawal for the full amount. But with this biweekly payment plan the homeowner mails one check for $600 two weeks ahead of schedule and then mails another $600 two weeks later. The bank gets the full $1,200 on time each month except that half of it is sent in two weeks early.
  • The net result is that borrowers pay less interest because they are paying off their mortgages a little earlier each month. The homeowner essentially winds up paying a full extra month’s worth of mortgage payments each year.
  • By paying an extra month’s worth per year on a 30-year fixed rate mortgage loan a LGBT borrower can save a month a year, 12 months in 12 years, and about two and a half years over the lifetime of the 30-year loan. Consider, for example, a loan with a monthly payment of $1,200. Over a period of 30 years the savings will add up to approximately $1,200 times 30 – or more than $35,000.

Every LGBT borrower should check the terms of their specific mortgage to make sure this payment procedure is allowed. But in most cases it is not only possible but is really easy to implement and lenders are more than happy to get half of each monthly payment slightly ahead of schedule..

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Refinance into a 15-Year Loan.

Another strategy for shortening the life of a typical mortgage that is amortized over 30 years – as the majority of home loans are – is to refinance that loan into a 15-year mortgage. .

Normally this kind of approach can be prohibitively expensive because the monthly payments on 15-year notes are generally about 50 percent higher than they would be if they were scheduled across a 30-year timeline. A 30-year fixed rate mortgage for $300,000 with 6.5 percent interest typically carries monthly payments of about $1,800, for example, whereas the same kind of loan amortized over only 15 years will have monthly payments of more than $2,600..

But right now the math favors those homeowners who took out a loan back when interest rates were much higher than they are today, and for many LGBT borrowers the 15-year mortgage has become a viable alternative. That’s because interest rates today are at historically low levels, having fallen so far in 2010 that they hit all-time lows within the past few months. In early December, for instance, many major mortgage companies were offering 15-year fixed rate mortgages at 3.75 percent interest. Refinancing a $300,000 loan at that rate will result in monthly payments in the neighborhood of $2,200.  .

When using the example from above that’s an increase of about $400 compared to the old payment of $1,800. But it generates savings of nearly $50,000 over the lifetime of the loan and the homeowner pays off the loan in just 15 years..

Some LGBT homeowners put significant amounts of money into low-interest savings accounts or routinely invest extra income in the lackluster stock market in order to create a nest egg for retirement. But they may be better served by using that discretionary income toward a 15-year refinanced mortgage – especially since money paid as mortgage interest qualifies for an IRS tax deduction to provide additional financial savings incentives..

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Before embarking on any kind of mortgage plan it is always wise to consult a creative mortgage broker or loan officer, and for LGBT borrowers there are many advantages to using a trusted LGBT-friendly mortgage professional. They can help determine what is best for each LGBT homeowner based upon his or her particular financial circumstances, unique needs, and evolving goals and dreams..

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For expert help with mortgage and real estate needs from professionals devoted to the GLBT community, visit www.GayMortgageLoans.com and www.GayRealEstate.com, or call toll free 1-888-420-MOVE (6683)..