Hey nobody likes being in debt. So wouldn’t it be great to be able to pay off your mortgage sooner? Maybe you are wondering what the advantage of paying off your mortgage will be?
By paying off your mortgage sooner, it means you will pay less interest to the bank. And doesn’t sticking it to the bank instead of having the bank stick it to you sound good?
Make Payments Every 2 Weeks Instead of Once a Month
If you make your monthly mortgage payment every 2 weeks instead of once a month, you will make an extra payment every year. While this is NOT a new idea it is still a good idea!
The thing is that you probably won’t notice the difference at first. But over the years this will end up saving you thousands of dollars in interest.
Pay Just a Little Extra
Most homeowners using this tactic can shorten their term by up to seven years.
Sounds Great! But How To ACTUALLY Do It
If your first thought was that there is no way you can make an extra payment every year, let me tell you that it is much easier than you think. First of all, break the extra payment down by dividing it by 12. This will take some of the edge off that number and make it much easier to swallow!
I am just throwing some numbers out here as an example. But you will get the general idea. If your mortgage payment is $750, you will need to save an extra $62.50 per month so you can make that extra payment every year. That is only about an extra $2 a day and I am sure you could find some way to find an extra $2 to cut out every day.
Unless you LIKE giving that money to the bank…
Now I have to admit that I am a very cheap person and I am always looking to save money. Maybe it was my grandmother always telling us about growing up during the Depression and how tough it was. We all need to be prepared for tough times and save in every way we can.
So maybe you could switch from stopping at Dunkin Doughnuts or Starbucks and start making coffee at home?
Or you could pack your lunch and save a bunch of money. Plus you will be able to eat healthier!
I know for some people that cable is a must. But why not cut back to just the basic package? Heck I have not had cable in years and can tell you that with the right antenna, you don’t need cable. With cable there are just more channels with crap you don’t want to watch!
Take a long hard look at your budget. I am not saying you have to cut out every guilty pleasure you have. I have my bad habits that would save me a boatload of money if I could just stop.
Still the thought of beating the bank by making an extra payment every year is something you should consider.
Maybe that email you got last week about being the sole heir of a long lost relative that owned a gold mine in Nigeria was legit.
Seriously though if you suddenly find yourself with some extra money, why not use it to help pay off that mortgage?
I know it is tempting to blow any unexpected cash. Using that money to make an extra mortgage payment will make a huge difference in the overall amount of interest that you pay.
A Word of Warning
Since I am NOT a financial adviser or a tax professional, I would suggest speaking to both to see what they suggest. Because everyone is different and these tips might NOT be the right choice for you.
You need to remember to have a emergency savings fund. Most people would suggest at least 6 months worth of cold hard cash in the bank that will cover all your bills.
Also if you have a credit card or personal loan with a high interest rate, it could be better to pay it off first.