Is it possible to take mortgage refinancing long term home mortgage loan refinancing mortgage pay it off faster and save money in the process? While I would like to say, "absolutely", I need to qualify that with 2 circumstances. Let's explore the topic and see what is required. I mentioned in the title of this article that 3 easy steps are needed so let's start there.
Step 1-This may be so simple as to not be worth writing, and, an absolute requirement to handling our mortgage loan is that our net income on a monthly basis is larger than our expenses. Sorry people, this is one of those inviolate laws...we must make more income than we spend. If you are upside down financially, get right side up by increasing income and/or reducing expense, then you have some discretionary income to work with.
Step 2-Simple step number 2 is one of personal choice. Some of us want to be out of debt, and some of us don't. My parents' generation seemed to really hate the concept of debt; we baby boomers and younger, have taken leverage and debt and made it an art form. Perhaps a nice balance lies somewhere between those two perspectives. Let's use debt, our home mortgage, to acquire the property that we want, and then let's pay off that mortgage in the fastest time possible so we save as much money as possible.
Step 3-In this step, we get to manage the process. Most of us know that if we send in some extra money from time to time, "payable to principal only", the balance of our mortgage debt is immediately reduced. By reducing the mortgage balance, the length of time that we must pay on the mortgage is also reduced. Most of us also recognize that our normal monthly mortgage payment is generally comprised of a payment to principal and a payment to interest. This is where it gets fun. The principal payment portion of my mortgage payment is quite small compared to the amount of interest I pay (for approximately the first 20 years). So, when I send in a separate principal payment to my home mortgage lender, it may take many months off of my loan repayment schedule. For ease of math, let's say that I send in one year worth of principal...that one step immediately saves me one year worth of interest as well! Sometimes, sending in just several hundred dollars can save us several thousand dollars. And it's guaranteed!
I encourage you to take a look at your mortgage and this process. The math to do it accurately can be tedious so I purchased a piece of software to help me be precise and save the most money possible. It took my mortgage from 28 years to 6 and saved me approximately $350,000 in mortgage interest! Now, to me, that's fun.
James Oates III is a former Captain in the United States Marine Corps, an entrepreneur, a Harley rider, and investor, who has a passion for helping people get out of debt. Learn more about James at http://www.FinanciaLiberty.com and http://www.JamesOatesIII.com
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