Congratulations on owning a home. You saved the money, found the right place, and now you have 30 years to pay down your mortgage. Or… you can shorten that time by paying it off early. How?
Mortgage Acceleration – The practice of paying off a mortgage loan faster than required by terms of the mortgage agreement. As interest on mortgages is compounded, early payments diminish the period needed to pay off the mortgage, and avoid a quotient of compounded interest.
Send in one extra payment a year and ask that it go towards the principal balance. That is the same as doing a bi-weekly program that many mortgage companies offer, but often times charge you for. You can shorten your mortgage by about 7 years (assuming you’re starting with a 30 year mortgage). Don’t ever pay for a mortgage acceleration program. There are mortgage acceleration financial products that you can pay for, but if you are disciplined you can do the same thing yourself. I encourage you to see if an extra payment works for you.
Check out this online calculator to see what your savings could be.
Saving thousands in interest over the life of a loan with just a little extra money each year sounds good, doesn’t it?
