Home Edition September 2016
Making Extra Mortgage Payments Can Pay Off, but Should You?
It's a strategy that crosses the mind of many borrowers when they take on a home loan: make an extra mortgage payment or two every year and save tens of thousands of dollars in interest. The move can shave off costs for a home loan and ensure it’s paid off faster.
Even one additional payment a year can translate into big savings.
Even so, there are potential financial drawbacks to consider. Borrowers who can afford to make extra mortgage payments tie up cash that could be put toward retirement or used for emergencies.
Here are some tips to consider before taking steps to make extra payments on your home loan:
1. Weigh your priorities: It may be tempting to double down on your mortgage payments, but doing so may not be a good idea when other financial needs take priority. First, be sure that you have three to six months' salary set aside to cover emergencies. In addition, make sure you can afford to continue saving for retirement and your children’s college tuition before making extra mortgage payments.
2. Slash other debt first: Paying off high-interest debt such as credit cards is another priority that should be put before focusing on paying down your home loan faster. Consider paying off car loans, too.
That's because home loans are likely the least costly debt a borrower will have, especially if they took advantage of low mortgage interest rates. In addition, homeowners are allowed to take a deduction on their income taxes for the interest paid on their home loan.
3. Do it yourself: There are many ways to accelerate payments on your mortgage, including paying a little bit extra every month, or making a lump-sum payment at the end of the year. Another approach involves paying half of your monthly mortgage bill every two weeks. Over the course of a year, you end up making 26 transfers, which works out to an additional monthly payment.
4. Watch out for fees: Regardless of the payment plan, make sure you understand any fees involved with making extra payments. Be wary of third-party companies who offer to assist with making extra mortgage payments.
Contact me today to learn more about how I can help you with your home financing needs.
Home Depot Rides Housing Boom to Record Sales
Home Depot posted record sales and earnings during its second quarter and raised its profit expectations for the year as the U.S. housing market continues to warm up.
Home improvement retailers have been a bright spot while other shops, like department stores, have seen sales slow as consumers shift away from buying clothing and move toward things like experiences, services, and fixing up their houses. Atlanta-based Home Depot's profit jumped 9 percent to $2.44 billion, or $1.97 per share, edging out Wall Street expectations by a penny, according to analysts surveyed by Zacks Investment Research.
Sales surged 6.6 percent to $26.47 billion, also slightly better than expected. Revenue at stores that have been open for at least a year rose 4.7 percent. The measure is a key indicator of the retailer's health.
The solid report came as government data showed continued health in the U.S. housing sector. The rate of home construction grew 2.1 percent in July, mostly because of an increase in apartment construction. It was the strongest pace of new home starts since February. New home construction had jumped 4.8 percent in June.
The company is also expanding its online services and sprucing up its mobile features. Online sales rose 19 percent and represented 5.6 percent of total sales in the latest quarter.
For several years, Home Depot has been offering services like allowing online customers to order online and pick items up at the store. But now it's shipping products from the store directly to online shoppers. It's in 700 stores and will be rolled out to all stores by year-end. Home Depot operates more than 2,200 stores. The change has helped tighten the delivery time to a two-hour window, a service that is helpful for professionals looking to have items dropped off at their work sites.
Home Depot has also enlarged mobile images and added live mobile chat, as well as simplified the check-out experience.
With the housing market on the rise, places like Home Depot will continue to thrive as homeowners take on more home improvement projects.
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