The Market Moving Forward

As recently discussed on our blog, the market currently lies in favor of sellers as opposed to buyers, an analysis which is likely to change as buyers may have the opportunity to step forward later this year. News of mortgage rates and home prices increasing by mid 2019 gives potential homebuyers the chance to reconsider in 2018.

Data from CoreLogic and the U.S. Census Bureau and Department of Housing and Urban Development predict that median home prices are expected to increase by 3.9% in mid 2019. Mortgage trends and experts have similarly suspected that mortgage payments on a median-priced home could possibly increase by 10% in 2019. While no prediction can ever be taken as fact, it is something to consider. This increase in home prices and mortgage rates can be intimidating for potential homebuyers, but there is a silver lining.

The demand for homes in 2018 has given sellers the upperhand, while the latter half of the year may be the time when buyers take reign of the market. Considering these factors, it is encouraged by data that potential buyers reconsider a home as the market may shift in their favor due to increased availability of homes and a predicted slowing down of demand. With that being said, step over sellers, and make room!

Advertisements

Ideas for Brightening Your Summer Space!

 

What better time to brighten up your outdoor space than during the summer? Here are some simple and exciting tips to not only brighten up your backyard, but your Monday too!

Often times, homeowners may think that making a space feel new can only be achieved through costly renovations. We challenge this today beginning with your outdoor space. Whatever that may look like for your home.

Some of the best ways to change the feel of an area can be done through small changes. We’re highlighting some of those small changes to help you update your yard just in time for more late summer nights. If your patio or front porch constitutes your outdoor space, consider purchasing a bright new rug or vibrant pillows to add a pop. There are many options for weather proof decor, so always consider this for its durability. Additionally, something that works in any outdoor area is adopting colorful new plants. These bring new life to an area while feeling appropriate for the summer. Something that works great for backyards are colorful lanterns. These can be filled with electric candles if necessary, or even citronella to ward off those pesky mosquito’s.

Hopefully these tips help you to renew and enjoy your outdoor area this summer!

MORTGAGE CREDIT NEWS BY LOUIS S. BARNES – 6/29/18

It’s early for that bugaboo, but it is mercifully obscured by another one: “yield curve inversion.”

First the data, then define the terms, study the patterns, and make a wild guess.

Monthly orders for “durable goods” are a valid signal for business conditions, and the word from May was surprising: volatile orders for transportation aside (airplanes), the rest were to have grown by 0.5% in the month and instead fell 0.3%. This category is supposed to benefit from the new tax cuts and federal spending.

Today also from May, personal income rose 0.4% but spending only 0.2%. “Personal Consumption Expenditures,” the technical version of consumer spending has dropped from annualized 4%-ish to 3%-ish. The stagflation aspect: for the first time since 2012 the “core PCE deflator” (the Fed’s favorite measure of inflation) has risen to 2.0% year-over-year and is accelerating, Jan-Feb at 1.5%, Mar-Apr 1.8%. “Real” personal income is nominal minus inflation, and it is steadily falling, prior months revised downward.

Stagflation is very rare — a stagnating economy is incompatible with rising inflation. For inflation to rise we must have rising incomes to pull prices up. Or, as in the 1970s a catastrophic increase in the cost of a key commodity — oil leaping from $3.00/bbl to $35/bbl in just eight years, 1972-1980.

One other way to produce inflation while incomes are flat, this one of immediate concern to the Fed: the Fed and Congress shoving money into the economy to get higher growth and instead just getting higher prices.

How can this be? Look outward: global competition has capped many categories of US wages no matter what the Fed and Congress do to boost growth. Pushing on the proverbial string.

Oil has risen $15/bbl in nine months to $74/bbl, but energy is excluded from “core” inflation, and the Fed tends to see small-scale energy spikes and ramps as transients not affecting the deep structure of prices. Rising oil also tends to hurt consumers.

Taking all of that in, if you’re the Fed you feel confirmed in gradual rate hikes: inflation is the enemy, and unsustainable growth must slow.

Now shift signals! To this inversion business. That term, together with “flattening yield curve” refers to a closing spread between long-term yields and short-term ones, which when reaching upside-down conclusion has accurately predicted recessions. All of them.

For civilians: long-term rates should always be higher than short-term ones because risks expand with time. The mechanism for short rates to rise above long: a central bank hiking short-term rates until the economy cracks.

The long-short spread this week reached its narrowest since the last recession, the 2-year T-note at 2.52% and the 10-year at 2.84% — just 32 basis points apart. When the Fed hikes two more times and if long-term rates stay put as they have since February, we’ll be inverted. Will that mean recession soon?

The Fed yesterday posted a short internal paper titled “(Don’t Fear) The Yield Curve.” With a title like that, prudence would be to sell everything and move far away. This time I think the conclusion may be correct, but the method in the paper is the very worst of the Fed. Quantism. On Wall Street a “quant” is a well-educated genius engaged in “quantitative analysis” to find mathematic convergences. These correlations do work in trading until they end in seismic error (see Long Term Capital Management 1998, whose warnings we ignored and gave us 2008). An except from the “(Don’t Fear)” paper:

The forward rate at a given maturity can be thought of as a gauge of the market’s expected short rate at that horizon, plus a term premium. On the other hand, because a bond’s yield is an average of the forward rates over the term of a bond, yields tend to dull the signal embedded in forward rates. The near-term forward spread we focus on is the difference between the current implied forward rate (on Treasury bills) six quarters from now and the current yield on a three-month Treasury bill….

Oy. Instead of quantism, stick with plain sight. The Fed begins to hike the cost of money when the economy grows beyond capacity, and intensifies the hikes at signs of overheating. When the Fed makes the turn from stimulus to tightening, long-term rates jump faster than the Fed out of fear for how high the Fed may go. Then the two rise together until another magic moment: the Fed keeps going up, but long-term rates stop. Inversion end-game.

Do long rates stop rising, as now, in anticipation of recession? Most bond traders and salesmen would argue otherwise: as the Fed pushes up the whole rate structure, long-term yields become irresistible to buyers. The buyers are predicting the past: they see deals better than any in the prior several years — just as now, a 3.00%-paying 10-year last available seven years ago.

Meanwhile the Fed continues to hike because it takes time for hikes to slow the economy. The Fed always overshoots, with the best of intentions but slightly panicky about inflation. The most powerful hike-to-effect lag: housing feels rate hikes first, but the labor market — central to inflation-fighting — takes a year or two to roll over. Hence repeated massacres of housing. (Note: on the far side of the recession as rates fall, housing recovers quickly but jobs don’t, so the Fed overdoes its backside easing.)

Today’s stalled long-term rates and incipient inversion are a false signal, and complicate the Fed’s life. Long rates are clearly pulled down by global ones, German 10s today 0.304%, Japan’s 0.032%. The bond market response to Fed hikes is all screwed up: the Fed has hiked 1.75% since December 2015, and the 10-year T-note since then has risen only one-third as much, from 2.30% to roughly 2.90%. Mortgages are up from the 3.50% all-time lows, but the pre-hike centerline was closer to 4.00%, and today’s 4.75% is not slowing anything.

The Fed always has trouble, but this predicament is new: long rates staying down are canceling the effect of hikes in short-term rates, not at all a traditional flat-curve warning to the Fed that it is going too far. The Fed does need to slow the US economy back to 2% GDP or so, but if long rates stay down then short rates have a long way to go up. No market is prepared for that possibility, quickly becoming probable.

 

US 10-year T-note, stuck since February:

 

The Fed-predictive 2-year T-note has stalled for two months, most likely a mis-pricing which may also have overseas roots:

 

The newest economic data has ker-plunked the Atlanta forecast, but from sky-high to sensible:

 

The ECRI is always less hysterical than other measures, and has the economy in remarkably steady growth above the fed’s target and oblivious to the Fed’s hikes:

MORTGAGE CREDIT NEWS BY LOUIS S. BARNES – 6/22/18

Markets held tight ranges this week, the 10-year T-note entering its sixth month trading between 2.90% and 3.00%, lowest-fee mortgages roughly 4.75% throughout.

The week brought little new economic data, and efforts to think about anything were discombobulated by political eruptions. The most important economic aspect, the onset of tariff war was still tops on the addled minds in markets.

One bright moment of clarity came in a speech by Chair Powell on Wednesday. Instead of reading the predigested propaganda of Wall Street and its economist sales-assistants, go to the source. Powell is not an economist and writes in English. He was educated by Jesuits, who insist on good thinking.

Powell’s speech is short. The opening sentence: “…The U.S. economy is performing very well.” The last sentence of the introduction: “…the case for continued gradual increases in the federal funds rate is strong.”

If you find ambiguity there, please let me know. Markets disbelieved the Fed’s warnings of rate hikes to come from 2012 forward and were right. Now their skepticism is misplaced.

The body of his speech is a concise (two page) discourse on the inexact science of central-banking, and a fine historical review concluding with “The lack of useful historical precedent leaves us with some uncertainty….” Yellen agreed.

Powell concluded that there are no early signs of inflation despite extraordinarily low unemployment, but our risks are not limited to inflation. “We have often seen confidence become overconfidence and lead to excessive borrowing and risk-taking, leaving the financial system more vulnerable. Indeed, the two most recent U.S. recessions stemmed principally from financial imbalances, not high inflation. While some asset prices are high by historical standards, I do not see broad signs of excessive borrowing or leverage.”

We do not have current inflation or exuberance problems, therefore we are undertaking prudent pre-emption because the economy and employment are so strong.

How much pre-emption is prudent? Back to Powell’s first paragraph: “Growth is meaningfully above most estimates of its long-term trend — though admittedly, that trend is not as strong as we would like it to be.” The first half of that sentence is for us in markets, the second half to keep idiot politicians off his back, those who think the economy can grow to the sky without risk, and the Fed is the problem.

The longer we grow above trend, the riskier growth becomes. If the economy begins to show signs of inflation or imbalances, the Fed will lean hard and recession would follow. Instead the Fed would love it if we would slow down gently and soon for any reason — rate hikes, tariffs, or no reason. The new tax cuts and spending reduce the likelihood of spontaneous slowdown, and so the Fed is forced into this gradual pre-emption, hoping to detect a slowdown and stop hiking before over-doing. What are the Fed’s chances?

Ha. Aha-ha.

Fortunately, in today‘s world, the chances of premature recession are higher than the chances of letting inflation out of the box. You kids under 60 do not want to live through a time of Fed catch-up. I’ll take a too-quick recession every time.

A brief history of Fed time follows, which Powell shows that he is studying carefully.

Modern economies and central banking began at the end of WW II in 1945. Since then two big changes have altered the Fed’s operations.

Prior to 1978 the Fed’s Regulation Q capped the interest rates which banks paid to depositors. Creating a recession was simple: sell short-term Treasurys, forcing up yields until they exceeded the Reg Q cap, and deposits then flooded out of banks into Treasurys. No money to lend, old loans had to be called — a “credit crunch” and recession. Let the recession run long enough to extinguish inflation, then back to normal.

By 1978 Reg Q had to go. Electron thingys had infected money, which began to flow around regulations of all kinds. So, in 1979 when Paul Volcker had to stop inflation running at one percent per month he had no choice but to run interest rates to the moon until the economy cracked. 18% mortgages and 22% “prime” — both nearly double the rate of inflation to get inflation to come down.

The second big change since 1945: the 1990 end to the Cold War and the opening of China and eastern Europe. Nobody saw it at the time, but the natural tendency of economies to overheat into inflation gave way by globalization to wage and price suppression and a natural tendency toward deflation.

Powell’s speech included a look-back to the last time US unemployment was as low as now, and the onset of inflation — in the 1960s, and not comparable to today. US labor markets had no overseas competition. Japan exported transistor radios, not yet autos; wide swaths of Europe had just come off war-rationing of food. An overheated US labor market quickly went to wage-price spiral.

Our recessions since 1990 changed prior pattern. The one in 1990 was partly old-fashioned: after the Crash of ’87 new Chair Greenspan took Fed funds back up to 10% (mortgages 12%), inflation then 5%. Yup, recession — although the Fed was surprised, and had to ease all the way to 3% in 1993 to get us out of it.

Then from 1994 to 2000 the economy ran hot but inflation did not, and we entered a phase of self-congratulation. And an IT bubble. Inflation rose from 2.5% to 4%, the Fed went to 6.5% and… both bubble and inflation crashed. Note how little above inflation the Fed had to go to get a recession result. (Further note: falling inflation and rates create asset bubbles; as the rate of discount falls, present value jumps.)

Next, in a period of idiocy having nothing to do with Fed monetary policy, instead the greatest financial crime of all time, Wall Street intentionally manufactured and sold several trillion dollars of IOUs guaranteed to default. “Financial imbalance.” The Fed’s brief maximum rate in the period was 5.25% versus inflation about 3.5%. Then as all good kids know, the Fed had to go to zero for seven years.

Globalization and wage and price suppression live on today. The last three times the Fed lifted its rate significantly above inflation (“imbalances” be damned) we had surprise recession and a surprisingly deep one. The Fed’s rate is now at the rate of inflation. How far up before — in the magical prescience of a fortune-teller — the Fed accurately anticipates a slowdown ahead and stops?

 

Chart is from 1983 to present, core CPI inflation in blue, Fed funds in red. Prior to 1990 the Fed had to hike far above inflation to stop it, and into the mid-‘90s above inflation just to keep it under control, but less and less. Since 1990 accidental overdoing has been the rule:

MORTGAGE CREDIT NEWS BY LOUIS S. BARNES 6-15-18

Long-term US interest rates today are the same as one week ago. How we have arrived at unchanged is a good yarn.

The eventful last week began with the G-7 meeting and our declaration of war on Canada. Prime Minister Trudeau got his “special place in hell” by objecting to US tariffs imposed by Trump using Cold War national security powers. Puzzled and annoyed (politely) Canadians had not known that they are a security threat.

Then the Trump-Kim summit. The consensus among analysts seems to be, “Um… What was that?” Mr. Trump’s performance in Singapore recalls James Thurber’s essay, “If Grant Had Been Drinking At Appomattox,” in which a confused Grant offers his sword to an equally confused Lee. Trump does not drink, but fractured thinking does not require alcohol.

Markets ignored both of those adventures, instead focusing entirely on central bank meetings, the Fed and ECB on Wednesday, the BoJ on Thursday. More on them in a bit — yesterday Trump topped the central bankers in one swell foop, proceeding with a tariff on China’s exports. That did it. Trade war has caved-in the stock market’s knees, which has helped interest rates to stay put. China will retaliate, but we might get lucky, noise and tit-for-tat posturing but then stopping. However, the same thing lies ahead with Europe, and canceling Nafta would open hostilities with both Canada and Mexico, our two most important trading partners. At the moment a threat, not yet an event.

Before discussing the Fed (save the best for last), first the two lesser central banks. In grand European style, the ECB announced that it will stop buying IOUs in December, but will hold the cost of money to negative-0.4% “at least through the summer of 2019.” Thus simultaneously ending stimulus and continuing stimulus, the yield on German 10s fell to 0.40%, also pulling down on US rates.

(Euro footnote. At a time when the zone could provide some much-needed global leadership it is slipping back into local dithering. Merkel’s government and career may fall any day. The US has its immigration issues, but at least makes its own decisions. Germany via Brussels insists on making immigration decisions for the others, and its own absorption of one million refugees last year is not going well.)
The Bank of Japan today said that it would “patiently continue current monetary easing.” Yup, forever. Japan’s GDP today is about the same as 20 years ago, now about one-quarter the US. Its budget deficit is 4.5% of GDP, about $225 billion. The BoJ today re-committed to buying government bonds at an annual rate of $725 billion (not a typo, three times the issuance of new IOUs). Its 10-year bond yield is 0.036%. Japan’s continuing existence as a financial entity is imaginary, but will last as long as its citizens believe in the yen.

The Fed.

Two huge changes at the Fed are underway, masked by this week’s net-unchanged markets and goofy public policy.

First, from now on the Fed’s rate hikes will matter. Two-and-a-half years of quarter-point nibbling at the cost of money, from 0.25% to 2.00% had no cost or risk, just going from nothing to something. Now “prime” is 5.00%. Helocs will adjust to 5.00% or more this month, as will adjustable-rate mortgages. Every new hike will bite into borrowers.

Second, if the economy does not slow of its own accord the Fed will force it to slow. Chair Powell’s post-meeting written statement and press conference were things of beauty, pleasant shifts from academic-wordy to cordial but blunt and narrow. He dodged every opportunity to engage in politics (trade issues, for example), and gave markets less information about future policy. That tell-‘em-nuthin is back to the future: the old-fashioned Fed always wanted markets to trade on economic information, not Fed wig-wags.

Powell’s two velvet sledgehammers: first in his post-meeting statement, de-bloated by one-third, he removed this line: “… The federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.” We’re not saying when we’re going higher because we don’t know, but mark your calendars for June 13, 2018 for the day the Fed flipped from stimulus to leaning against the economy. Powell’s second signal: “The US economy is in great shape.” The Fed’s job in that case: to take away the punch bowl. He did not use McChesney Martin’s old saw, but might as well have had a punchbowl as a prop.

These Fed changes are unmistakable to markets. So, why are rates unchanged? Short term rates rose a bit, the 2-year T-note to 2.56% rising mechanically in anticipation of another Fed hike in September. However, the credit markets are not priced for the Fed’s advertised even-money bet for another hike in December, and three or four more in 2019.

Why? The credit markets spent the last ten years disbelieving the Fed’s announced intentions to hike. It may take a while to react fully, which makes the Fed’s job harder. If we hike and you don’t take us seriously, then we have to hike harder. (Smiley emoji.)

Second, markets feel protected by the possibility of an “inversion,” short-term rates rising above long ones. The Treasury 2s-to-10s spread this week contracted to its narrowest in this cycle, only 36bps. Everyone knows that an inversion means a recession ahead, and the Fed would not invert us on purpose… would it?

Hell yes, it would. Especially if long-term rates are artificially suppressed by global buying of US long-term bonds. The ECB and BoJ own all the good-quality ones. Our 10s pay 2.91%. Or you could buy an Italian one paying 2.60%. Or a UK “gilt” for 1.33%. A Spanish 10 gets you 1.29%. France pays 0.73%.

The Fed must switch to a pre-emptive stance even if inflation does not rise much above 2%. That is its job. An inversion is no protection, merely an international curiosity which can force the Fed to hike short rates faster and farther. For our own good.

 

The 10-year T-note just in this last week. What was more important, the Fed on Wednesday, or tariffs on Thursday? You be the judge:

 

The 10-year T-note in the last year, stuck since February, outside pressure canceling the Fed:

 

The Fed’s infamous “damned little dots,” each official casting a marker for the location of Fed funds at the end of each year. Throw out the top four and bottom two (the Fed coop includes four known hawks and two doves, and we don’t call ‘em bird-brains for nothing). The other voters mean business — their 2019-2020 estimates are above the “longer run.” Bye-bye punchbowl:

 

One economic indicator has shifted to heat. The NFIB small-business survey from the 2016 election forward was more political pleasure than actual business performance, optimism way out-running results. The survey for May shows fundamentals quickly catching up:

MORTGAGE CREDIT NEWS BY LOUIS S. BARNES

This past week has been quiet in anticipation of the five-ring circus in the week ahead.

The program: G7 meetings underway now and through the weekend, the Kim summit and European Central Bank (ECB) on Tuesday, the Fed on Wednesday, and the Bank of Japan (BOJ) on Thursday. Each event can have significant economic effect, including immediate changes in interest rates.

Before handicapping the relative impact of each pending performance, a surprise! A retired lion-tamer has just entered the center ring! Although this time accompanied by an odd-looking dog….

Ben Bernanke yesterday: the new tax cuts and federal spending “make the Fed’s job more difficult all around… stimulus at the very wrong moment is going to hit the economy already at full employment in a big way, and then in 2020 Wile E. Coyote is going to go off the cliff.”

Bernanke is not given to intemperate remarks, and may modify these in days ahead. However, as a forecaster he is hard to argue with. Just this: we can hope that the tax bill was so badly crafted that it does not stimulate, just lines the pockets of the lucky.

The circus rings in chronological order, beginning with the G7… the G7 are Canada, Italy, France, Germany, UK, Japan, and the US. As a group, the “West,” the legacy winners and losers of World War II who took the vow never to do it again, and the center of global economic cooperation. It used to be G8, but Russia was expelled after invading Ukraine.

Among the leadership of the G7 and their peoples, Mr. Trump is by a wide margin the most-disliked US president ever. Emanuel Macron of France yesterday tweeted in English: "The American president may not mind being isolated, but neither do we mind signing a six-country agreement. Because these six countries represent values, they represent an economic market which has the weight of history. No leader is eternal. We inherit commitments which are beyond us. We take them on. That is the life of nations."

Departing for the meeting, Trump wished for re-inclusion of Russia. Nebraska Republican Senator Ben Sasse today: “Putin is not our friend and he is not the President’s buddy. He is a thug using Soviet-style aggression to wage a shadow war against America, and our leaders should act like it.”

Ouch. The direct cause of economic unpleasantness in the 1930s was the breakdown of international cooperation. G7 discord if it grows and includes China would be an economic suppressant, including pushing down interest rates although at a cost not worth paying.

The ECB on Tuesday… the ECB is still buying 30-billion euros-worth of IOUs every month, and maintaining a cost of money at negative point-four percent. Claims of healthy European growth ring hollow in light of that on-going stimulus and core inflation barely above 1%.

ECB effects are likely to be perverse. If it begins to stop its IOU-buying, in theory interest rates would run up in a colère du temper; however, past ECB suggestions of tapering have brought the opposite. Withdrawing stimulus invites a weaker economy and lower rates. Also, the ECB will soon change leadership from Mario Draghi and his “whatever-it-takes” to a new president. Since ECB founding in 1998 the Europeans have not allowed a German president (so far, Dutch, French, and Italian), and the Germans are becoming insistent. A German ECB president may not be as reluctant as the others to have a recession named after him.

Also on Tuesday, the Kim summit. Oddsmakers assume a non-event. Posturing without real progress, although retreating some distance from the imminent threat of military action. Given the volatility of the parties, no telling. If it does not go well, fear in markets pushes money to US bonds and rates go down.

The big show is Wednesday, the Fed. It will increase the overnight cost of money from 1.75% to 2.00%, taking “prime” to 5.00% for the first time since 2008. The big question for housing: will long-term rates also rise .25%, putting mortgages astride 5.00%?

The answer will depend in part on what the Fed says. The Fed’s neutral rate — neither tight nor easy — is defined as the rate of inflation, now presumably 2.00% plus some body-English and Kentucky-windage which varies from time to time (a lot), today perhaps another half-percent. The heart-stopping moment, gasps from the crowd will be when Chair Powell sticks his head into the lion’s mouth. He will volunteer or certainly be asked, how close are you to “done?” Will you stop at neutral, wait for possible inflation data? Or ooch your way on past neutral?

I suspect that Powell will struggle to get away with “too soon to tell,” and further suspect that the Fed may be past neutral on the tight side now at 2.00%. Evidence: the Fed has pushed 10s up, not inflation. Evidence II: despite Bernanke’s sense of stimulus, if it were truly hyper-goosing the economy we would see it by now.

The 10-year T-note has been within an inch of 2.90% since January, mortgages similarly close to 4.75%. In the last two months the 10-year spread to the 2-year Treasury has been locked at .45%. If the Fed is already on the tight side, 10s will rise only a little above 3.00%, mortgages still below 5.00%, and the 2s-10s spread will close — all indications that the Fed will pause after another hike or two.

If the spread does not close, 10s and mortgages rising with Fed funds, that will suggest the Fed is on a necessary pre-emptive course intending to skim the froth off the economy.

Oh — the BOJ on Thursday. By then the crowd will have left. Nobody around but the custodians sweeping up after the elephants. The BOJ has lost its freedom of action (a caution to all), Japan so deeply in debt to itself that the BOJ in perpetuity will attempt to hide it from sight.

 

US 10-year T-note in the last year:

 

Fed-predictive 2-year T-note:

 

The Atlanta Fed GDP Tracker is smoking in Q2, but in large part a natural rebound from weak consumer spending in the first quarter:

Making Paying Off Your Mortgage Early a Feasible Option

For some, attempting to pay off your mortgage early may seem like a pipe dream. Though like with most things, every effort to make it happen gets you closer to reaching your goal. On our Mortgage News blog today: tips to pay off your mortgage early while reducing costs! Before considering any of the tips below, always check with your mortgage officer to see which methods are a feasible option for you.

 

The first tip for reducing the length and cost of your mortgage is to consider refinancing to a shorter term or better rate. While initially the short term costs of refinancing may be pricey, in the long run it may be able to allow you to pay off your mortgage up to ten years sooner than expected while saving money on interest costs.

 

The second option is to aim pay a little more each month. This may allow you to pay off your mortgage sooner while not having to budget as much up front. For those on a tighter budget, this may be the best option as even setting aside $20 a month can shave off years of payments and reduce the amount you’re spending on interest costs, making the home-packed lunches to work worth it.

 

Some mortgage companies may have a prepayment penalty fee, so it is very important to reach out to your loan officer before deciding on doing so. If this is the case, making one extra mortgage payment at the end of each year may be a great option for you. Not only will it reduce the longevity of your payments, but it will also lower interest costs. This can be done by setting aside a small amount each month as opposed to coming up with a lump sum at the end of each year.

 

Reference the link below and talk to your loan officer today when considering one of these options to pay off your mortgage early!

 

Reference link: https://www.bankrate.com/finance/mortgages/4-ways-to-pay-off-your-mortgage-earlier-1.aspx