Most people when asked would find a way to pay their mortgage early. Here are some tips that may help you pay off your mortgage earlier than planned.

When getting a new mortgage

Before deciding on a 15 year mortgage consider a 30 year term instead. If you are comfortable making the monthly payment on a 15 year mortgage, then pay that amount but on the 30 year mortgage. Ok I’ll explain. Let’s say you have a 30 year mortgage for $200,000 and the monthly payment is $1,074 at 5% interest rate. However your payment on a 15 year mortgage would be $1,582 also at 5% then $508 a month would be going to principal. Wow, that’s powerful.

To put that into perspective

The Secret Banker’s Rule is such. For every $1 you put towards your mortgage the bank gets $10 if your interest rate is at 5%. When paid before it’s due (i.e. extra principal payment) this gets turned around, reverse compounding. Now you would get the $10 and the bank would get $1. Let’s take this a little further. The $508 a month equals $5,080 in interest savings. In other words, money you don’t have to pay

Paying twice a month

Did you know that by paying twice a month or bi-weekly you actually create one whole extra payment a year.
If you think about it, there are 52 weeks in a year divide into 2 that’s 26 bi-weekly payments which amounts to 13 months. Does this make sense?
This will definitely remove about 6 years off a 30 year mortgage. Also making bi-weekly payments may be easier to cut off your budget as oppose to paying one lump sum to create that one extra payment a year.
The downside to this method is most lenders charge a fee for allowing this payment service, but the fee is nothing if you think of the bigger savings in the long run.
Another way to do it is simply put half of the payment into a savings account every 2 weeks and then make your monthly payment. This will create a whole extra payment at the end of the year.

Add extra payment

Instead of the usual fixed amount paid for monthly try adding an extra principal payment. A certain percentage of the monthly payment when paid extra will work almost the same as doing a bi-weekly payment without paying for the extra fees added by lenders.

Pay in advance

As you can see by the sample above that it’s a huge interest savings when paid in advance.
Knowing that you may want to put whatever little extra money you get as a commission or bonuses towards your mortgage. Now if you would like to find out how you can have the extra money going towards your mortgage without coming out of your pocket you may want to attend our free seminar called Equity Acceleration Program offered by JCC Alliance network.

Attend one of our free webinars

Paying for mortgages and debts seems like an unending ordeal that we face every month. Reality is we have to pay these mortgages to be able to keep what we have such as our house and cars. Not everybody can afford to pay for a house one time and rely on mortgage loans to be able to construct and buy their dream house. However since this is a long term debt, sometimes it feels like it is unending and many would find ways to make use of mortgage accelerator plans.  The earlier they pay the mortgage, the earlier they can plan for their retirement.

A Bi-weekly mortgage payment is actually a great mortgage accelerator plan that would make paying your mortgage loan faster than usual. This is how it works, instead of paying your mortgage in a monthly basis, you will have to split the payment and pay for it every two weeks. This may look like the same but it is not.  In a year we have 52 weeks which means that you will pay your mortgage 26 times a year resulting to 13 months of payment in a year instead of the usual 12 monthly payments in a year. So for a 30 year loan, you can end up paying for it in 23 years and lessen 7 years in payment (depending on the interest rate). Depending on what you and your lender had agreed it can actually not only pay your debt in an earlier times but also lower the amount of money that you will have to pay.

The advantage of this payment plan is that you are able to finish paying of your debt earlier than the expected time without even feeling its effect on your budget. It is as simple splitting you monthly mortgage in a month into two and paying it every two weeks. For example, if your mortgage is a thousand dollar per month, you will have to split it into two payments and pay $500 every two weeks. In a year instead of a total payment of $12,000 on a monthly basis, you end up paying $13,000 without even feeling the difference.

As great as it may sound, it may also has its drawbacks. Bi-weekly which really supports reverse compounding because it’s paid before it’s due. Any extra payments towards principal causes reverse compounding. Some companies do not even approve of bi-weekly payments. Remember, the longer that you owe them money, the more they get to earn from you. Some may accept the payment but they will not apply the payment to the principal. That means that you just paid early but the debt should be computed to be reduced but you might find some discrepancy on the computation. These are some of the few things that you should watch out for.

You may also watch out for companies that charges penalties for pre-payment. Yes, some companies do. Even though you are paying early, you are getting penalized for it. Most mortgage companies do not charge pre-payment penalties, but to make sure to ask your lender because they may be included in some of the few that charge pre-payment penalties.  If in doubt, you can always ask the help of experts that can offer other solutions aside from the bi-weekly mortgage acceleration plan. Who knows, you may even end up getting better options.

Attend one of our free webinars to learn how to Super Accelerate the payoff off your mortgage.