Im sure the question of how to pay off your mortgage has crossed your mind at some point. The global economic crunch has got hundreds of thousands and Americans extremely concerned about their mortgage debt.
We want to know how to fully pay off mortgage because we want a debt-free life and huge amount of savings. Paying off your mortgage is a financial strategy that does not pose risks.
Because we get confused with the many strategies and methods presented to us these days, we get stuck at asking the same question and not take action.
Making sure that you are making the most logical decision is not something you should feel bad about. After all, your home is your major financial asset.
The many mortgage pay off techniques can be summed up into two specific strategies.
Strategy one: mortgage prepayment
The first strategy is called mortgage prepayment. You can do this by simply using your extra money to pay off your mortgage faster. The best way to do this is to remit extra mortgage payments by subtracting a minimal amount from your paycheck every month. You may also opt to do the biweekly prepayment program or contribute extra amounts if you have extra cash available.
When you choose to employ the mortgage prepayment strategy, you have to set aside a certain amount for extra mortgage contribution every month. You will have to decide whether you should pay off your mortgage, or invest your savings in your 401(k), or just save your extra money for your kids college education. Making the right decision could be confusing.
Two: Mortgage Acceleration
This particular method is relatively new as it has only been around for the last 10 years. Mortgage acceleration makes use of the concept of leverage in paying off mortgage faster. Some of those who have utilized this method have paid off their mortgage without changing their financial lifestyle or spending more than what they are supposed to spend.
The way leverages applied with mortgage acceleration is really very simple. Let’s assume for a second you had two credit cards. One credit card had an interest rate of 2% and the other has an interest rate of 6%. Now what would be the fastest way to pay off both these credit cards and save thousands of dollars in the process?
You guessed right. You would borrow money from the 2% credit card and pay off the 6% credit card. Simply doing this could save you 4% in interest. Over a period of 10 to 12 years this could mean a significant amount of interest savings.
We can apply the same strategy with a credit card towards the mortgage. Let’s assume your mortgage is at 6% interest rate. We now go ahead and open up a home equity line of credit. We deposit our paycheck into the home equity line of credit at the beginning of the month and pay the bills at the end of the month. If you set this up correctly you can convert your home equity line of credit to a 2% interest.
Then simply all you have to do is borrow money from the home equity line of credit at specific times and use this to pay off your mortgage.
The result? You save over $63,000 worth of interest. Plus you get to stop paying mortgage 13 years earlier.
And heres the best part, you wont have to adjust your lifestyle in the process.
Related posts:
- Step By Step Guide On How to Pay Off You Mortgage-
- Payoff Your Mortgage Faster. Free Mortgage Acceleration Calculator
- How To Pay Off Your Mortgage – 2 Ways To Retirement Faster 241
- How To Pay Off Your Mortgage In 2 Ways For Debt Free Retirement 219
- How To Pay Off Your Mortgage In 2 Ways For Debt Free Retirement 232
