Would you like to know how to slice years off of your mortgage payments and save thousands of dollars in interest, without getting stretched financially?
Anyone who currently carries a mortgage or anyone who is thinking about purchasing a home should pay close attention.
Here are 3 simple, financially feasible ways to help you become mortgage free!
One simple way to shave 5+ years off of your mortgage is to simply divide your current monthly payment in half, and make biweekly payments instead of one monthly payment.
If you’re paying $1200 every month, simply split that amount into two $600 payments and you’ll be amazed at the years and interest payments you can eliminate.
Word of caution: many banks will try to offer you a “biweekly” mortgage payment service, which usually has a fee associated with it. Do not fall for this. With a little discipline and good planning, you can do this yourself, for FREE!
Let’s do the math: if you have a 30-year, $200,000 mortgage and pay 5% interest on it, by doing biweekly payments you will pay off your house in approximately 25 years and save around $34,000 in interest!
One extra payment a year
Instead of making biweekly payments, you can decide to make one additional mortgage payment a year, either right after your tax return is received or whenever you get a bonus at work.
By choosing this method, you will maintain your regular mortgage schedule, and use any “extra” cash in order to make that one additional payment. In order to be consistent, pick a specific month each year that would be your month to make that extra payment.
By using this technique you’ll reduce your mortgage by 5-6 years, depending on your terms.
Additional monthly principal payment
If you do have some wiggle room in your budget, adding an extra amount to your monthly principal payment is the best way to reduce your mortgage, especially if you can find $100 – $200 a month to dedicate to your mortgage payoff. If you can’t come up with that amount, even an additional $25 – $50 each month will make a big difference.
Keep in mind that you should always focus on saving for emergencies first, then on eliminating consumer debts, and then on insurance and investing before you turn your full energy to tackling your mortgage. Once you’re free from all of your consumer debt (which most of the time will carry a much higher interest than your mortgage) and you have a solid financial foundation of savings, you’ll be able to focus on nothing else but eliminating your mortgage and continuing to build your reserves.
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