Secrets to Reduce your Mortgage Term by 30%

The best way to acquire wealth is to purchase a home. But when you do actually get the house you must use a mortgage lender in order to finance the purchase. They love to lend you money because they gain up to 3x times the amount back on the interest that they originally helped finance. The goal is to pay back this money with the least amount of interest payments that you can. You can win the lotto but for the realistic this is not an option. There are some strategies that you can incorporate to cut your loan term down by as much as 2/3 of the time thus paying back less interests.

The 10% Principal Rule

This is one of the simplest ways to cut the term by as much as 66% less and save you a bunch in interests costs. Simply every month that you pay your mortgage, add 10% - 20% extra and add it to the principle. Lets say that you have a mortgage of $2000.00; add $200.00 and make it an additional payment towards your principle.

Another slower way is that you can do this once a year like around the time that get your tax return back. So lets say that you still have a $2000.00 mortgage, at the end/beginning of the year send a one time payment to go towards principle only for $2400.00.

Advantages

1. You are in control.
2. Limited possibilities for late payment.
3. You decide how much or when to pay extras.

Disadvantages

1. Not automatic, all responsibility is left on you and your discretion.

This is the absolute simplest and safest way to reduce your mortgage term. I used this method on a property and sometimes I put the extra towards principle every month but I also put extra in bulk one time a year. The property is a little over a year old and I reduced my years by 3 1/2. My monthly interests deductions from my mortgage payments has reduced and my regular monthly principle monthly has increased.

Bi-Weekly Factor

This is a method that makes it automatic but some lenders charge hidden fees for this so be careful. All you have to do is set it up with your mortgage lender that you want to pay basically twice a month. This will hit your cash flow a little hard and it will become mandatory to pay this at said times.

Advantages

1. All automatic.

Disadvantages

1. You are not in control.
2. Increased possibilities for late payments.
3. Everything is fixed.

I love looking at my monthly statement and realizing that I am cutting down my mortgage on a monthly basis. I personally use the 10% Principle Rule combined with an extra month worth of mortgage paid directly toward principle. Use these steps and pay off for your home in no time so that you can start on your new home/property purchase.

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