{"id":671,"date":"2017-09-25T15:06:09","date_gmt":"2017-09-25T15:06:09","guid":{"rendered":"http:\/\/www.mikeclover.com\/blog\/?p=671"},"modified":"2017-09-25T15:06:09","modified_gmt":"2017-09-25T15:06:09","slug":"make-your-mortgage-go-away-faster","status":"publish","type":"post","link":"https:\/\/www.mikeclover.com\/blog\/2017\/09\/25\/make-your-mortgage-go-away-faster\/","title":{"rendered":"Make your mortgage go away faster\u2026"},"content":{"rendered":"

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\"Man<\/a><\/p>\n

You\u2019ve purchased a fine new home and now you have a fine new mortgage. Even though you would have been spending those dollars on rent had you not made the purchase, looking at 30 long years of payments can feel like a heavy burden.<\/p>\n

The good news is, you can make that payment go away much faster.<\/p>\n

You may have noticed that in the first years of your loan, far more of your payment goes to interest than to paying down the principal. You may also have noticed that over time, those numbers change. Every dollar you pay toward the principal is a dollar that is no longer accruing interest.<\/p>\n

Say you take out a loan for $200,000 at 4.5% interest. Your monthly payment is $1,013. Of your first payment, $750 will go to interest and only $236 to principal. Each month the numbers shift by one dollar- with one dollar less going to interest and one dollar more going to pay down the loan. It will take approximately 17 years for the balance to shift \u2013 more to principal and less to interest.<\/p>\n

However, you can change that balance in your favor, simply by paying a little more, especially in the early years of your loan.<\/p>\n

You can make one extra payment per year<\/strong><\/p>\n

If you get an annual bonus or always get an income tax refund, use part of that money to make an extra payment on your loan. In the example above, you\u2019d be knocking 4.29 months off the length of your loan \u2013 or one year for every 3 years that you make the additional payment.<\/p>\n

You can add a little extra every month. <\/strong><\/p>\n

Adding just $50 or $100 each month will shrink the number of years on your loan \u2013 but what if you could add an extra $236 per month? You\u2019d effectively be making 2 payments rather than one \u2013 and eliminating $750 in interest that you will never owe.<\/p>\n

Create your own amortization schedule.<\/strong><\/p>\n

Decide how long you want to keep making those mortgage payments, then create an amortization schedule based on the interest you\u2019re paying today. It\u2019s like refinancing, but without the reduction in interest OR the fees and loan costs that you\u2019d pay for a refinance.<\/p>\n

You can find amortization scheduling programs on line, or simply give your lender a call.<\/p>\n

You can refinance.<\/strong><\/p>\n

If you\u2019re still paying a high interest rate, it could be in your best interest to refinance. This is especially true if you now have 20% equity in your home and can finance OUT of an FHA loan. As you are probably aware, FHA loans carry mortgage insurance for the life of the loan \u2013 eliminating that will give you extra money to pay down your loan.<\/p>\n

We at Homewood Mortgage, the Mike Clover Group, will be glad to go over the numbers with you so you can see exactly how a refinance would affect you.<\/p>\n

Should<\/u><\/strong> you try to pay your mortgage off early? <\/strong><\/p>\n

You should if your goal is to become debt-free and you can answer yes to these questions: <\/strong><\/p>\n