With the new year, many people like to plan for what is to come. One very important thing to think about is money and how you are spending it. With that in mind, I thought I would share two ways to pay off your mortgage faster. This will allow you to either save more for retirement or just have more money in your pocket each month once you don’t have a mortgage payment.
The first way many people know about: bi-weekly payments. Most banks will give you the option to either pay your mortgage monthly, or pay half of your mortgage payment every two weeks. What this means is that you either pay 12 payments in a year (12 months), or you pay 26 half payments (52 weeks divided by 2) which equals 13 total payments in a year. By just making this one extra payment each year, you can cut up to 7 years off of your mortgage. What difference would it make if you had 7 extra years where you were not making mortgage payments?
The second way is a little more in depth, and I think you will see its benefits pretty quickly. The next time you get your mortgage payment reminder go and look at how much of your payment is actually going to principal (paying down the loan amount). Whatever that amount is, make a second payment each month for the next months principal. You are going to pay it anyways, you are just paying it in advance. Using this method you can cut your mortgage in half. Think about paying a 30 year mortgage in 15. What would that do to your financial life.
Of course, if you or anyone you know is looking to buy a home (get a mortgage), sell a home (get rid of a mortgage), or invest in real estate (get a lot of mortgages), please let me know! You can reach me at 515-724-3163 or RyanLynch@KW.com.
Have a great week!