Losing sleep over mortgage payment? Finding it hard to make ends meet after it eats away at your take home pay? Worry no more. Here are some tips to help you navigate the mortgage scene better.
Diversify your income portfolio
This is the simplest of tips, though not the easiest. Most people are stuck in a 9to5 job that they hate, the percentage of people who actually love their jobs is so small that it gets no mention anywhere. Most people, when think of earning extra, imagine doing another job and that brings a look of disgust on their faces.
They need to think smart, not hard. A diverse income portfolio can be a buffer against poverty, homelessness and a lot of other things. Extra money coming in from secondary sources can make mortgage payment very easy.
Now when I said secondary sources I didn’t mean active sources. I meant passive sources. Some of the passive income sources are savings accounts that offer higher yield ( there are plenty as banks are competing hard with each other), online portals for buying and selling, mutual fund investment, etc.
It won’t be easy, make no mistake about it. But if you can make it work, paying mortgage won’t be an issue anymore.
Rent your space
If your mortgage premium is substantial, it means you live in a considerably large house with 2-3 bedrooms. The number of bedrooms could be even more if you purchased the house freshly after the recession.
Renting the property can bring in extra cash which you can use to pay off your mortgage. Now I know it’s not a novel idea but keep reading as I have some totally new pointers on it.
Rent or lease the entire property. If you don’t find a buyer, rent it as a coworking space. It’s a new concept but picking up pace pretty quickly. Put an ad on the local newspaper or on the Internet. Won’t take long to find someone interested. Applying to AirBnB is also a great idea. You’ll get an endless stream of tourists who’d pay more than the locals.
The next pointer is renting your garage space. Startups don’t mind setting up offices in garage spaces; some even actively search for such arrangements. They are cash-strapped, so don’t mind a bit of bargaining. They could pay you more than the market rate as renting standard office spaces is hella expensive for them.
Refinance your mortgage
I know what you are thinking. It’s too risky, it caused the 2008 financial debacle. Well, things are different now. Applications for both refinancing and purchase have increased this year. This year, the number of new mortgage financing applications is 479% higher than the previous year.
The reason behind this frenzy is a sharp reduction in interest rates. The low interest rate offers homeowners quite a few options. You can go the cash refinancing route. Homebuyers are on the hunt, so expect a good deal of money. The biggest challenge of this kind of refinancing is investing the money afterwards and getting a suitable ROI on the investment. You can invest the money into rental properties to live off of the income.
If you don’t want the cash and just looking for a better deal, take advantage of the low interest rate. There’d be a drop in your monthly income caused by the reduction if you manage to get a better rate. Use the extra money to pay off the new mortgage rate. One word of caution, though; select a fixed-rate loan and not an adjustable-mortgage rate.
Take another mortgage loan. No I am not kidding, I am damn serious. As stated before, buying a mortgage property at this point means taking advantage of the falling interest rate. Shop around to get the best rate. And when you buy the property, rent it immediately to start making money.
You can save money in two ways if you follow this strategy. First, pay a fraction of the rent you receive from the tenant as your monthly mortgage payment and save the remaining amount. Second, you get a break from the interest tax deduction. The amount may be small after the Tax Cuts and Jobs Act (TCJA), but it’s still better than nothing.
When you combine all the money saved using these strategies, paying off the mortgages won’t be very difficult. Of course, you need to be strategic in your approach and use any opportunity you get.
Almost every homeowner from the middle-income group is worried about paying mortgage. But guess what, worrying about something is futile as it never eliminates the problem. So instead of worrying, follow all the tips shared here to pay your mortgage.