Whatever the number of bullet points you've seen on how to pay off your mortgage faster, you really only need to focus on ONE
“Here is the surest and fastest way to pay off your mortgage”
What's next? 40 Ways, 50 Ways? Forget all the lists. Who can remember that many anyways?
I’ve got something better and it's only ONE thing you need to remember!
This kind of article has been published and re-published year after year, website after website, author after author. I did a quick search on Google. Who are some of the big websites that have published this title? You can go ahead and read them, but, you won’t get the most important point without reading further in my article.
Is it because you thought there might be some other way to do it. An EASIER way. Is there some hack or trick or something you haven’t already read, year after year? Will you read that one extra bullet point that will pay off your damn mortgage that much faster?
Stop wasting your time reading all these different methods and tips.
There is only one you need to know. And that knowledge alone will allow you to pay off your mortgage faster.
But, first, there are 3 things that you need to understand with a mortgage and paying it off faster.
(Term and Amortization)
Principal is the loan amount you are taking from your lender.
Interest is the money you owe to the lender based on the Principal amount. The lender charges you this for lending money to you.
There are two time components in a mortgage. The first is the length of time of your contract with the lender, also known as the term. The second is the length of time that your mortgage is calculated to be paid off, also known as the amortization period.
Yes that's all.
If the lender says you have to pay $900 per month, then pay $950 or $1000. Don't just pay what is needed, you need to pay more!
All the other points about eliminating coffee, or creating a budget, or eating out less are just ways to save money. But, saving money won't help unless you use it to pay more than the required amount!
You have to utilize that money you saved to pay more than the required amount. If you don't, then all those "tips" to pay off your mortgage faster (which in actuality are about saving money), don't actually work. They only save you money. It won't pay off your mortgage faster.
It's really that simple. If you pay more than you have to, you'll pay off your mortgage faster.
And by truly understanding this, then you can decide if you want to reduce your daily coffee consumption, or change your vacation plans, or whatever. Maybe you don't even have to!
What About Paying More Often?
Yes, I'm sure people have told you to pay more often. That helps a little. But, doesn't compare to paying more than what you need to.
Paying more often is actually about paying more.
For example, when you pay $1000 every month, you're paying $12,000 over 1 year.
When you pay $500 every 2 weeks, you're paying $13,000 over 1 year. So, you've effectively paid more than what you have to, unless that was your schedule in the first place.
So, what are you going to do with this knowledge? Feel free to comment below.
Copyright 2018, Mortgage Crunch