Pros Of Making Extra Mortgage Payments
Every homeowners dream is to have a home that is free and clear. Most homeowners have a 30 year fixed rate mortgage loan and 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. Pay 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 on your monthly minimum mortgage payments. As long as you can afford making that little extra cash you have on your mortgage payment instead of splurging on other items such as reducing going out to eat, going out to bars, or other non necessary spending habits, many can reduce their 30 year mortgage term to 25 years, 20, years, or even less than that.
Benefits Of Making Extra Mortgage Payments
The main benefit of making extra mortgage payments each month is that you get to save tens of thousands of dollars in mortgage interest over the life of the mortgage loan and you get to reduce your 30 year mortgage loan term. If you were even to pay an extra $100 per month towards your principal and interest every month, you can save thousands in mortgage interest and can most likely reduce your mortgage term by more than 5 years depending on how much your 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 your loan. The higher your mortgage rate, the better result you 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 your mortgage paid off in 15 years or less. It is not impossible and it is definitely doable without changing your financial profile.
Best Investment By Making Extra Mortgage Payment
Consider that making extra mortgage payments every month an investments. The more extra payment you make on your mortgage payment each and every month, the more you can get a return on your investment on your 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 grow your equity in your home.
Think Ahead Of Retirement
All hard working Americans will retire. When they retire, they will definitely see a major reduction of their income 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, it a mortgage payment can exceed more than 50% of the their monthly fixed income. The mortgage payment is not the only expense. You also have gas bills, water bills, electric bills, cable bills, telephone bills, internet provider bills, and other monthly bills where many seniors stress over their monthly bills due to their mortgage payments. Everyone’s retirement plan should be by having their homes paid off by the time they retire and 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.