Making Extra Mortgage Payments To Pay Off Loan Balance Early
This Article Is About Making Extra Mortgage Payments To Pay Off Loan Balance Early
Every homeowner’s dream is to have a home that is free and clear.
- Most homeowners have a 30 year fixed rate mortgage loan
- The term to pay off their mortgage loan is 30 years if they make the minimum principal and interest mortgage payment
- However, by making extra mortgage payments, a homeowner can pay off their mortgage loan balance many years prior to the 30-year term is up
- Many mortgage servicer offer a bi-weekly payment plan for borrowers
- Payment your mortgage payments bi-weekly versus monthly will save you close to 7 years off the term of your loan
- Why is it so?
- Because by making bi-weekly mortgage payments, you are making an extra month’s of mortgage payments every year
- That shortens the term of your home loan
- Besides setting up a bi-weekly payment plan with your mortgage servicer, whenever you have extra cash, you can always pay down the principal loan balance
- Make sure when you are making extra payments to pay down your principal balance to tell the mortgage servicer to apply the extra payment to pay down the principal of your mortgage loan balance
- Making extra mortgage payments every month does not have to be a substantial amount
It is just a practice and habit of paying just a little bit of extra payment each and every month extra in addition to their monthly minimum mortgage payments.
Having Extra Money To Pay Down The Mortgage Balance
As long as homeowners can afford making that little extra cash they have on paying extra mortgage payments to pay down the principal loan balance instead of splurging on other items, they are on the road of achieving the goal of owning a home without a mortgage.
- By making that extra mortgage payment and applying towards the principal can reduce their 30-year mortgage term to 25 years, 20, years, or even less than that
- Depending on how much extra you can make towards principal payments
- Paying the mortgage loan balance earlier than the end of the mortgage loan term will also save homeowners tens of thousands of dollars
Benefits Of Making Extra Mortgage Payments
The main benefit of making extra mortgage payments each month is homeowners can save years off the term of the loan term. Depending on how much and how consistently you make extra payments that is above and beyond the minimum monthly mortgage payments. Just by making bi-weekly versus monthly payments, homeowners get to save tens of thousands of dollars in mortgage interest over the life of the mortgage loan. They get to reduce their 30-year mortgage loan term.
- If homeowners were to pay an extra $100 per month towards their principal and interest every month they can save thousands in mortgage interest
- Can most likely reduce mortgage term by more than 5 years depending on how much mortgage balance is
- A couple of hundred dollars in making extra mortgage payments every month can mean a 10-year reduction on the term of the loan
- The higher the mortgage rate, the better result borrowers will make in making that extra mortgage payment every month
- Many homeowners who are disciplined in making extra mortgage payment every single month can reduce their loan term by more than half
- How would you like to have the mortgage paid off in 15 years or less
- It is not impossible
It is definitely doable without changing financial profile.
Best Investment By Making Extra Mortgage Payments
Consider that making extra mortgage payments every month an investment:
- The more extra payment homeowners make on their mortgage payment each and every month, the more they can get a return on investment on their home
- The best investment most Americans can make is the investment in their home where there is little to no risk
Making extra mortgage payments every month will rapidly increase equity in the home.
Think Ahead Of Retirement
All hard-working Americans will retire.
- When they retire, they will definitely see a major reduction in their income
- This is no matter if they have social security income, pension income, or income from their retirement accounts
- The housing payment is a person’s biggest monthly expense
- For a retiree, mortgage payments can exceed more than 50% of their monthly fixed income
- The mortgage payment is not the only expense
- Homeowners also have gas bills, water bills, electric bills, cable bills, telephone bills, internet provider bills, and other monthly bills
All these bills are where many seniors stress over their monthly bills due to their mortgage payments.
Thinking About The Future And Retirement
Everyone’s retirement plan should be by having their homes paid off by the time they retire. The best way to do it is by paying a little extra every month towards their mortgage loan balance. I have seen many times over and over where a $200 extra monthly mortgage payment every month can reduce the 30-year mortgage term to less than 15 years or less.