Every Individual Proceeds With Extreme Caution When It Comes To Applying For An Arizona Home Loan

Category: Finance.

Every individual proceeds with extreme caution when it comes to applying for an Arizona home loan. This can cause a lot of problems.

However, most people do not exercise the same degree of caution when it comes to repaying the home loan. A recent study shows that households spend more than$ 5 billion a year, or$ 400 per household, by accelerating their mortgage payments. Most Arizona home loan borrowers have an urge to clear their home loans and be free of debt as soon as possible. The study showed that more than 38 per cent of people who were paying off their Arizona mortgage ahead of time were making the wrong decision. Because of this a lot of Arizona home loan borrowers tend to repay their home loans well ahead of time. Research has shown that the money would have earned more interest and generated more savings for the homeowner had it been invested in a 401K plan.

However, instead of being advantageous to the homeowner, this can be a big disadvantage. While approaching Arizona lenders for home loans there are some points that every borrowers needs to keep in mind. Arizona mortgage plans tend to be some of the cheapest money that an individual can get. The first thing that a borrower needs to realize is that interest rates of Arizona home loans are not very high. If an individual is in the 25 per cent federal tax bracket, the 6 per cent interest rate imposed on the Arizona mortgage may be costing an individual who itemizes on the tax return as little as 5 per cent. Another reason for an individual not to prematurely pay off the Arizona mortgage is that contributions to a workplace retirement plan will get the individual further ahead. The difference in interest rate is substantial savings.

The reason for this is that most corporate organizations tend to match an employees contribution to the 401 K plan.