Think twice before you opt for a mortgage that extends fifteen, twenty or even twenty five years. Instead, check a mortgage calculator and shoot for a ten-year mortgage to start. By tightening your belt and cutting back on extras, it is even possible to be mortgage free in five years or less. How can this happen? In most instances, it helps if you’ve made a large down payment on the home in question, and received a good loan rate.
The best way to pay off a mortgage early is by paying extra on your monthly mortgage payments. Using a mortgage calculator, you can determine how much your mortgage payments will be for the life of your loan. Making extra, regular payments every month can save you tens of thousands of dollars over the life of your loan. If you can save $25 extra a month, and apply $100 extra a month to your mortgage payment, you can save about $80,000 in interest payments on a $120,000 mortgage!
In addition, using the aid of a mortgage calculator, you can reduce your loan by ten years! Apply the same basics when you start with a ten to fifteen year loan and using the same principles, it is possible to pay off your mortgage and become mortgage free years before you thought such an event was possible.
If you can’t spare $100 a month, even $50 or $25 will help to pay your house off early. Adding an extra $50 to your payment will save you roughly $52,000. Not exactly chump change, is it? In addition, with those extra payments, you’ll knock between 5-6 years off your mortgage. Only have about $25 a month to spare? You’ll still save an amazing $30,000 and take off a year on your payments.
Finding the extra change is something that most homeowners can do if they cut out going out to dinner every week to once a month. Instead of purchasing meals in restaurants every day at work, try brown-bagging it. And instead of coveting that new car in the lot on the corner, save to pay off your mortgage first.
Living mortgage free will enable you to enjoy those extras, in addition to obtaining peace of mind, less stress worrying about retirement and health care costs, and enable you to own your house free and clear. You can use a mortgage calculator to play with the numbers, and figure out how much extra will save you over the life of your loan. With house appreciation, you may be able to reap even greater benefits if and when you decide to downsize. You can use the money you’ve made on the sale to buy a smaller house outright, leaving your mortgage-due days behind forever.
Even if you can’t be consistent in paying extra every month, try to pay more than the minimum due whenever possible. Make up for short months when you can. Even if you like to write off your interest during tax time, you’ll benefit more by paying your loan off early and living mortgage free. Home mortgage interest tax breaks may net you about $6,000 in write-offs, but being debt free is, well, priceless.
A mortgage calculator will help you to determine exactly where you stand with your mortgage. Even if you’ve been paying the minimum payments on your mortgage for years, there’s no reason why you can’t start paying extra now. If possible, try to refinance to a lower interest rate, if it doesn’t kick up your loan too much. In addition, make sure that your mortgage lender won’t penalize you for early prepayment and find out if they have a cap for the most you can pay over the minimum due amount. Even though you have a mortgage, doesn’t mean it has to own you. You can take charge of your mortgage and live mortgage free with a little discipline, a little patience, and a few extra bucks every month.