Get Out Your Mortgage: How to Pay Off Your Mortgage Sooner
Of all the bills you pay in life, the interest on your mortgage is probably one of the biggest. Taking even small steps today to pay off your mortgage quickly can save you a ton of money over the life of your loan and get you out of mortgage debt much faster – which means you’ll have a lot more money to invest in your retirement, college funds, or use for fun stuff.
There’s a reason the tallest towers in America’s major cities are often occupied by banks: lending money long-term is extremely lucrative. For example, just the interest on a $200,000 30-year fixed mortgage at 6% is a whopping $229,528 over the life of the loan! Including principal, this $200,000 loan will cost nearly $430,000 to repay over 30 years. I don’t know about you, but I can think of a lot of other things I’d rather do with $430K than send it to my banker.
Let’s recap what this type of sale is. It’s when you sell your house for less than the mortgage. The lender approves the sale and the lender collects the proceeds from the buyer, whatever is left at closing after paying closing costs and real estate broker commissions and so forth. They mortgage lender releases the mortgage so the transaction can close. The mortgage company now has a financial loss. They may pursue you for that financial loss, which they can sometimes do through a civil court proceeding. Sometimes they cannot pursue you at all because state law prevents them from doing so. And sometimes you can negotiate with the home loan lender before the sale goes through, and they will agree in writing not to come after you for their financial losses.
A simple way to pay down your principal faster to get out your mortgage, without busting the budget, is to round up your mortgage payment to the next hundred or thousand. For instance, if your mortgage payment is $1013/month, consider rounding it up to $1100, then automate it with an autodraft from your checking account to reinforce discipline. Unless you’re running on an extremely tight budget, you probably won’t notice your slightly lower disposable income. If you’re lender allows you to, consider setting up a biweekly payment plan for your mortgage, which will result in a full extra payment being applied to your mortgage every year. However, make sure they don’t insist on ripping you off by making you pay for the privilege of making biweekly payments on an ongoing basis. If your lender doesn’t allow you to make biweekly payments or they charge a fee, you can achieve the same result by adding an extra 10% to your regular mortgage payment.
It isn’t a mystery how to pay off your mortgage quickly, and the dollars you’ll save is real money that you can use to save for retirement, invest in a college fund, or spend on that vacation you’ve always wanted to take. Taking some simple steps today to pay off your mortgage quickly could put tens or hundreds of thousands of dollars (depending on how large your mortgage is) back into your pocket instead of lining the pockets of your mortgage lender.
Learn more about Obama Mortgage Relief Plan Qualifications.
