Is Mortgage Payable a Current Liability?
The most important question you should ask yourself before settling for a loan for your house is can I pay off my mortgage as a current liability. If you are living in a city then it is not possible to pay off your mortgage by the due date and it may be better to consider refinancing the house and buying another one. However, if you reside in an area that has a large number of foreclosure auctions every year or you are paying the interest on your house every month on your home loan then you need to decide if you can pay it off a current liability. You may also be in a situation where you will only have a couple months left until your home loan is due.
The main reason you need to pay off your current liability is because you will have to take out a larger loan to pay off your old mortgage. In this case, if you are paying your mortgage on a monthly basis and you have not paid any of the interest on the loan in the past three years then you are going to have to stop paying all the interest and start paying a lump sum to get your loan paid off. This means you need to find a lender who has a lower interest rate than what your current mortgage is and does not have any requirements on you to pay the interest before they will let you borrow money to pay off your mortgage.
When it comes to finding out if you can pay off your mortgage a current liability on the best way to go about it is to contact your lender and see if there are any requirements you need to meet before they will grant you a loan to pay off your home loan. Most lenders have some sort of minimum amount you have to pay before they will allow you to borrow money.
Once you have done this and have a good amount of equity in the property you are going to be able to negotiate with the lender to get your monthly payment reduced as well as the interest rate for a longer period of time. If you have no equity in your home then you may have to work with a lender who is willing to give you more of a discount on the payments and the amount of interest that is applied for to make it easier to pay off your home loan.
Once you have paid off your current liability and your new lender gives you the approval then you will find that it is much easier to refinance the home loan at a lower interest rate and for longer terms. Your new lender will also be willing to provide you with more leniency on the loan in case you have more than one mortgage to pay off. If you have more than one mortgage and you are paying all the interest on one, you will find that the new lender will give you more of a discount.
Another option that is used more often is to pay the principal amount of the loan with one payment rather than having to pay the interest on all of it. This is particularly useful if you live in a location that is not considered to be a good area for lenders to buy your home from. You can pay the interest on just one monthly payment each month and get a higher discount.
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