Mortgages, like many things in the U.S. are something thought as a necessity to have a home. On a practical basis most of us don't have 100-400 thousand dollars lying around to just buy one and saving up that kind of money while paying rent will take a long time on most incomes with most rents. However in most U.S. states there is not a pre-payment penalty for paying just a little extra each month. It can add up over time!
The power of extra payments: For example if you just paid $10 per month extra on a $150K 30 loan at 4% interest you would save $3,243.31!! The earlier you can pay extra the greater the payoff. If you only made one extra payment of $100 and you made it on the first payment for the same loan above you would save $230.25 on your mortgage, more than doubling the investment. If you made that one payment half way through, the savings would only be $82.03.
I can't afford to pay extra: Where can you get that extra money. Most of us have something we could give up if we are willing to make a change. Do you have cable? Spotify? Netflix? These things are great, but if you can live without them for a while it could have a huge impact on your financial future. What about a $4 cup of coffee everyday? Maybe you still need the caffeine fix, but if you drop that to a $1 cup you could put an extra $90 per month against your mortgage (over $1000/yr). In the example above this would save you $23,276.24 over the life of your loan and you would pay it off about 6 years earlier! Look around at your spending, especially the small every day/week/month type of things and you will be surprised what you might find!
Click https://bit.ly/SlowWeathMortgageCalc to download the Calculator.
Check out this video to show you how to use it!
