| |
|
|
|
|
| Home
>
Personal Finance
>
Topics: Mortgages |
|
| ----------------------------------------- |
|
| Save Big $$$ and Pay Off Your Mortgage Sooner |
Submitted by:
mrshammer516 12/02/2008 8:12 PM
|
| |
Request a copy of your Amortization Schedule from your lender, and stick to it to the penny. That way your records will match your banker's. (Don't arbitrarily pay $500 extra toward principle.)
Most home mortgages are usually a traditional mortgage, or 'simple interest, no pre-payment penalty loans. You first need to determine exactly what type of mortgage you have.
Example: (Assuming no pre-payment penalty), $250,000. mortgage at 6% interest for 30 years (360 months) = monthly payment: $1,498.87 The principle and interest is due every 30 days. Without any further intervention or strategies on your part, all 360 payments must be made, for a combined total payback of: $539,595.47. Most of the interest is stacked at the front of the loan (most people will move within 5-7 years) so that the bank/lender gets their money out of you.
After the first 12 payments are made on a 250,000 loan, the new balance is 246,929.97 for a reduction in principle of $3,070.03. However $1,498.87 x 12 = $17,986.44 paid out.
The strategy is to write one check for principle and interest ($1,498.87)- Your 1st month payment. $1,250 is interest, and only 248.88 going to the principle (to pay off the loan).
Then write a second check for as many of the principle payments you can afford. Example: By paying the principle only of payments #2 thru #6 = $1,263.17.
You now are saved from ever having to pay the interest on payments #2 thru #6 (those 5 interest payments total $4,987.51 that you'll never have to pay). THE BANK/LENDER CANNOT CHARGE YOU INTEREST THAT HAS NOT ACCRUED!!!
So you're in your house 1 month, you've paid the first 6 payments and saved yourself $4,987.51 in interest that you'll never have to pay.
By the time you make the next month's house payment (second month) you might be able to knock out the first year of your mortgage and save yourself approx 10 grand in the process! Any extra money you can put toward it will knock it down more and more. I've checked it out with my mortgage guy and its 100% true and the banks don't want us to know about it.
Before we found out about this, for a 2 year period we paid out 20,404$ in payments, but only paid 1900$ on the principle - that means our lender made 19,504 of our hard earned money. Not anymore though!
Hope this helps!!! |
|
---
sponsored: Find Money Budgeting Tips.
|
|
---
Tip Hero serves up new money-saving tips daily.
Get free updates via Email , RSS or Twitter.
|
| |
|
|
| |
|
|
| |
| |
|
|
| |
|
|
|
|
