How to Save Thousands of Dollars in Interest and Pay Your Mortgage off Faster
There are a few easy ways to make extra principle payments that can save you a ton of money in interest expenses and get you mortgage-free sooner than you thought possible. Here are a few simple strategies you can use:
1. Round your monthly payment up
The results of this simple strategy can save you a fortune and drastically reduce the length of your mortgage.
As an example, if your monthly mortgage payments were $734 dollars a month, but you rounded it up to $800 per month, you would save more than $48,000 in interest payments, and reduce the length of your mortgage by 7 years!
2. Make One Time Pre-Payments Using Your Income Tax Refund
This is an easy way to save money and shorten your mortgage. For example, if you have a $100,000 mortgage, and you have a $1000 tax refund this year, you take apply that refund to your mortgage. Over time, this will save you more than $8600 and shave 1 year and 1 month off your mortgage! An amazing result from a simple strategy.
3. Choose a 20 Year Mortgage
If you can afford it, you are far better off getting a 15 or 20 year mortgage instead of 25 or 30 year. It won't cost you much more, and the interest savings are truly incredible.
If you have a mortgage of $400,000 at 3.3% interest over 25 years, your monthly payment would be $1,955.09. Compared to if you have the same $400,000 at 3.3% interest over 20 years, your payment would be $2,274.37. The payment difference would be $319.28. Check out the table below to see how you could save THOUSANDS on interest over the course of your mortgage.
|Interest||5 year term - 3.3%||5 year term - 3.3%|
|Amortization Period||25 years||20 years|
|Total Payments over term||$117,305.40||$136,462.20|
|Interest Paid over Term||$61,147.27||$59,518.28|
|Pricipal Paid over Term||$56,158.13||$76,943.92|
|Balance at end of 5 year Term||$343,841.87||$323,056.08|
Wouldn't it be nice to be mortgage free 5 YEARS SOONER?!
Using these strategies is the easiest way to reduce your interest expenses and shorten your mortgage period.
If you ever have any questions, please feel free to give me a call, text or email!
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