![Top Reasons To Own Your Home [INFOGRAPHIC] | MyKCM](https://files.mykcm.com/2021/06/03101649/20210604-MEM-1046x2206.png)
When applying for a new mortgage or after closing, many may have the option to choose between a single monthly mortgage payment or smaller bi-weekly payments. There are benefits and drawbacks associated with both options, and some personal financial considerations may need to be reviewed in order to make a decision that is best for the individual. With a closer look at the pros and cons of both options, homeowners or home mortgage applicants can make a more informed decision.
Easy Budget Management For Some
With a single monthly mortgage payment, there is often a need for those who get paid two or more times per month to properly budget so that they can comfortably manage the large mortgage payment with all of their other expenses throughout the month. With bi-weekly payments, the two smaller payments may be easier for some who are paid multiple times per month to manage and budget for. When an individual gets paid one time per month, the individual pay prefer to make the single payment each month.
Faster Debt Reduction
With a monthly payment schedule, 12 full payments will be made per year, and this is in contrast to a bi-weekly schedule which will result in the equivalent of 13 full payments being made per year. Essentially, the extra full payment that will be made with a bi-weekly payment schedule will result in faster debt reduction and in greater accumulation of equity over time. This can improve the homeowner’s financial standing over time.
Lower Interest Charges Over The Life Of The Loan
Because the principal balance will be reduced at a faster rate over time with bi-weekly mortgage payments, the total interest that is assessed on the loan will be reduced in comparison to monthly payments. Depending on the size of the loan and the interest rate on the loan, this may equate to a savings of tens of thousands of dollars or more in some cases.
Each homeowner’s or home applicant’s financial situation will be unique, and factors related to income, payment schedule, the desire to increase equity quickly and more should all be carefully considered. Bi-weekly payments often can be established during the loan application process, but they may also be set up after closing. Those who are interested in establishing affordable mortgage payments can speak with a mortgage representative about some of the different options available.
Are you clamoring for extra rooms or a more functional floorplan in your house? Maybe it’s time to make a move. If you’ll be able to work remotely for the long-term or your overall needs have simply changed, it’s a great time to sell your house and move up. Why? With mortgage rates in their favor and higher-priced home sales powering more moves across the country, sellers in today’s market are finding the space they need (and have always dreamed of) by purchasing a home in the upper end of the housing market.
With so few homes available for sale and high demand from today’s homebuyers, sellers are profiting in major ways this season. Bidding wars are gaining traction, driving up the sale price of more and more homes throughout the country. This means sellers are able to leverage extra cash from higher-priced sales while also taking advantage of today’s low mortgage rates when they purchase their next home. It’s the perfect scenario to move up into a true dream home. According to the April Luxury Market Report from the Institute for Luxury Home Marketing:
“The Institute’s recent analysis of sales in 2020 for homes over 5,000 square feet support the continuing preference for larger homes. The analysis determined that there was a 17% increase in the number of 5,000+ sq ft homes sold when compared to the number of sales in 2019.
Luxury home prices continue to see record highs in the majority of affluent ex-urban communities, as the influence of being able to work from home is still driving buyers away from living in high density areas. Low interest rates also remain in play, allowing buyers to realize the affordability of owning a larger property, which further reinforces this trend.”
Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), also explains:
“The market is hot pretty much everywhere and across all price points . . . The only area where there is sufficient inventory is in $1 million-plus homes . . . .”
While this price range certainly doesn’t fit every budget, if it’s in your reach this summer, you may want to make your move sooner rather than later. Today, more homes are available in this segment of the market, but as the report mentions, more buyers are investing here too, so competition may heat up sooner rather than later.
If you’re planning to sell your current home to move into a larger one, let’s connect today. We’ll discuss your current situation and the opportunities in our local market.