It is basic understanding that every situation demands a different solution and there is no one-size-fits-all when it comes to financial planning. While there are basic financial principles that everyone can apply, there are factors in each individuals situation that greatly affect what method of pay off is fastest for them. What’s more, at the moment, there is no place online, with rare exceptions, that offers a complete analysis that incorporates all these factors completely free of charge. As such, these guidelines are often overlooked since most online calculators, and even financial planners do not take these into consideration.
The most commonly used methods for debt management, specifically when it comes to home loans, are:
Higher Payments towards the Principal every month
Bi-Weekly Payment Plan
Refinancing the mortgage at more favorable terms
Using management software in combination with Money Merge Account systems
Debt Consolidation for overall lowered interest rates
Within these, one can take multiple sub-paths of payoff based on their situation. The most common things that greatly affect what method will be most effective include:
Frequency of income – this is usually ignored by most financial planners, but if you earn on a bi-weekly basis, your idea pay off method will be very different from someone who earns every quarter, or in bulk at every season (common for commission earners, farmers, and the like).
Time of property ownership – How long you’ve owned a property will also greatly influence what method will be good for you. For example, refinancing and consolidation can get you a better loan agreement, but one can end up de-leveraging of they sell the property before recovering the closing costs, or if they ‘reset the interest clock’ on their debt.
Number of loans – If you have multiple debts, an MMA based system will work far better than other methods of payoff. As the number of debt with different terms and rates increases, it becomes harder to make the best choices regarding one’s decisions. This is a very important aspect that is usually overlooked when one is trying to pay off their loan quickly.
Number of accounts to manage – including the checking, savings, and other related accounts at different banks, the higher the number of accounts to manage, the better it is to use a software solution to manage everything rather than making random transactions yourself.
Equity in the home – If one has a significant amount of equity built up in the house, it is best to avoid refinancing and bi-weekly systems. MMA, that makes use of one’s home equity is a good option in these scenarios.
Lack of discipline – For someone who struggles with controlling spending, MMA, Bi-weekly plans, and refinancing are good options. Extra payments on the principal are usually a poor option in such a situation.
Obviously, there are a lot of variations within these general guidelines for applying in instant cash loans Auckland, in sense to give customer more reliability at the time of installments. A good option for everyone is to read the free content at Dave Ramsey and Fool.com, and to make use of the free service available at Pay Off My Home Loan Now, where one can receive customized results for their particular financial situation.