40 | MARCH 25 • 2021

B

uying a home is
a major life step.
Homes are by nature
expensive, and most home
buyers cannot afford to
purchase a home outright.
Because of that reality, most
home buyers finance a home
purchase with a mortgage.
A mortgage allows you to
spread the payments for
a home loan across many
years. The result? Mortgages
can make home ownership
much more attainable for the
average home buyer.

WHY NOW IS A
GREAT TIME TO BUY
Currently, mortgage rates
are at historic lows, meaning
that the cost of borrowing
funds is lower than it has
been in previous years. If it
fits within your budget, now
is a good time to purchase
a home. In fact, Vanderbilt
Mortgage is offering new
home buyers who choose to

finance their home purchase
with Vanderbilt 60 days
with no payments after
their mortgage loan funds.
This provides a new home
buyer time to settle into
their new home and pay for
the costs associated with
moving — without having to
immediately account for their
first mortgage payment.

BENEFITS TO PAYING A
MORTGAGE OFF FASTER
While mortgages definitely
make sense for most home
buyers, there are advantages
to paying off a mortgage
before it reaches full term.
Why?
Because paying down your
mortgage early:
• Builds equity for resale.
Paying down the principal
balance on a mortgage can
build equity in your home
faster. Equity is defined
as the market value of the
home, minus the amount

owed on the mortgage. For
example, if your home is
worth $150,000 and you owe
$100,000 on the mortgage,
then you have $50,000 worth
of equity in your home. This
equity can then be utilized
when you sell your home
for a down payment on your
next home. In addition,
some of the equity could be
used to qualify for a home
equity loan to make home
improvements.
• Frees up cash for later.
Another benefit to paying
down your mortgage earlier
is reducing the years the
mortgage is active. Paying
the mortgage off earlier
will free up the money that
was needed for a monthly
mortgage payment, allowing
that money to be spent on
other items — or saved for
retirement or an emergency
fund.

HOW TO DO IT
If you’re interested in paying
your mortgage off more
quickly, here are two common
strategies you can use:
• Extra payments every
month. A more common
way to pay a mortgage
down early is simply to
make extra payments to the
loan’s principal each month,
as frequently as possible.
Whether it’s $5 or $100 extra
per month, every additional
principal payment you
can make toward paying a
mortgage down more quickly
really adds up. To show
you how that would work,
Vanderbilt Mortgage has
developed an early payoff
calculator to show how much
you can save by paying extra
toward the principal each
month.
• Annual Additional
Payments to Principal —
You can also help pay your
mortgage off faster by making
extra payments to principal
once a year. Whether it be a
tax refund you receive, yearly
bonus or extra savings, this
investment toward paying
your mortgage off sooner can
help save interest cost in the
future.

GO AT YOUR OWN PACE
It’s important to remember
not to overextend yourself
while you’re working to pay
a mortgage down. Create a
realistic budget and go at
a pace you can afford, and
you will reap the long-term
benefits. Your future self will
thank you!

How to Pay Your
Mortgage Of
Faster

BPT/BRANDPOINT

YOUR HOME

THE BERKS

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