Can you imagine the day when your entire mortgage is paid in full? How great will it feel the first month that you no longer owe a payment to your mortgage company? What a relief! You will finally have your house paid off, and you will own your house outright. The goal of a paid off mortgage might seem like a distant dream… especially if you are only a few years into a 30 year mortgage or if you are about to re-finance your current mortgage or even take out a new one. But believe it or not, there are ways to reach the ultimate goal of a paid-in-full mortgage earlier than you might have thought possible.
Extra Payments Make a Huge Difference
If you have a 30 year mortgage, you are required to make approximately 360 payments (30 years x 12 months) before your mortgage is paid in full. With such a large number of required payments, it can be difficult to believe that adding in a few extra payments here and there can make a difference in how quickly your mortgage is paid off.
Also, when looking at a mortgage that totals more than a few hundred thousand dollars, a few thousand extra dollars in payments over the course of 30 years can seem like a drop in the bucket. However, a few extra payments each year can make a significant difference in the total amount of time it takes to pay your mortgage in full.
As little as one extra payment per year can shave months off the amount of time it takes to pay off your mortgage. For example, if your regular mortgage payment is $1,500 per month and you make 13 payments of $1,500 each year instead of 12 (with the extra payment allocated strictly to principal), you will be paying down the principal on your mortgage at a rate of an extra $15,000 every 10 years. Not only does this assist you in reaching your goal of free-and-clear home ownership faster, but also it cuts down on the amount of interest you will be paying over the length of the loan.
Have Even More to Contribute?
If you have enough money to make one extra mortgage payment per year (with the extra payment allocated to the principal balance of the loan), can you imagine the possibilities if you had enough money to make TWO extra payments towards the principal balance? You’d be working toward having your loan paid in full much more rapidly than you might realize.
Don’t Worry if You Don’t have a Full Mortgage Payment
Even if you don’t have enough extra cash lying around to make an entire extra mortgage payment a year, any amount you have – – $100, $500, $800, etc. – – that is applied to your principal balance as often as possible will help shave years off the life of your loan.
For more tips and tricks on how to get your loan paid in full in less than 30 years, give The Home Loan Arranger a call today at (303) 862-4742.