If you were to add it all up, by the time you paid off your mortgage loan after 30 years or so of payments, then your interest and principle costs would amount to more than two times the price that you paid for you home, even more than that if your mortgage rate is higher than the 6 to 7 percent common today. Clearly, a significant chunk of your money has been set aside to pay down a debt. What if you could significantly reduce that impact? Would you? If so, there are three ways you can trim your mortgage expenses and shave tens of thousands of dollars off of your loan in the process.
Refinance to a Shorter Term – At some point along the way you may find that you can handle your mortgage payments, particularly if you have a fixed rate mortgage. What was a painful payment ten years ago may have gotten less so as your salary rose over the years and your other expenses stabilized. With 20 years left on your mortgage, why not refinance to a 15 year mortgage and go with the higher payments? You’ll not only shave five years off of your loan but you could trim more than $125,000 of payments if your original loan was in the neighborhood of $450,000.
One Extra Payment – If you can manage to make one extra payment per year and have those funds credited against your principle, then that is another way for you to reduce your mortgage term by 6 years or more. Simply make a 13th payment at some point in the year and have the mortgage company credit your account according to your expressed instructions.
Pay Twice Monthly – If your mortgage payment is $2500.00 per month, you could make two separate payments of $1250.00 each and significantly trim your mortgage. Yes, that is the same amount of money you are paying, but because you pay your amount more often, interest doesn’t accumulate as much. Hence, the shorter term for your mortgage. Some mortgage companies are even offering this option as one of their mortgage plans. Grab it if you can!
So, that’s it! It isn’t rocket science, just plain good sense. Who wouldn’t want to save enough money to finance other things in life? You can and you will, if you follow through with one of these three plans.
Adam Heist is the owner of the Loans website. At their website, you can learn more about
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