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.

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