Many people don't realize they can pay off their mortgage earlier without spending a dime extra. And it involves no paperwork or extra hassles either.
To make this work correctly, your loan must have NO prepayment penalty. If there is a penalty for prepayment, well, why did you get that loan?
Paying off your mortgage early is very simple. Take your current monthly mortgage payment and divide it in half. Pay half your mortgage on the 15th of each month, and the other half on the last day of the month. That's it.
Now I know you're asking, "Huh?" By making half your payment essentially two weeks early, you are not paying additional interest the last two weeks of each month. It may not seem like much, but if you do this every month, a 30 year mortgage can be paid off in 22 years. A 15 year mortgage can be paid off in 12 years. And you have spent $0 extra. In fact, you will have saved yourself thousands in extra interest over the course of your loan.
"But I won't have a tax deduction after that," is the biggest comment I get. SO WHAT? You won't have a mortgage payment every month, and that is money in your pocket.
As a word of caution, many banks will try to trick you into using exactly this method but will charge a "set up fee" to allow you to do this. But if you were smart in finding your loan, you already know that there are no penalties for prepayment, and you can establish the two week method on your own.
ScottyB authors the money saving websites Internet-Bargains.com and FrugalFriend.com |
