Knowing how to pay off mortgage is something that hundreds of thousands of Americans talk about especially now that our market is going through financial pains.
We all want to live a debt-free life and we want to save thousands of dollars. Paying off your mortgage is an investment strategy that does not involve risks.
And one reason we keep asking how to pay off your mortgage and still not take any action is that we’re so confused with all the choices these days we just don’t know the right action steps to take.
And you cant blame yourself. Your home is your biggest financial asset and so it is only safe that you ask the right questions first.
All of the mortgage payoff techniques can be broken down into two separate mortgage payoff strategies.
Strategy one: mortgage prepayment
Using the mortgage prepayment method means you will be remitting extra amounts to your mortgage balance using your own money in order for your account to be settled sooner. What most people usually do is to subtract minimal amounts from their paycheck and set it aside for mortgage contribution every month. Some would choose to pay off their mortgage using the biweekly prepayment program or simply make extra payments whenever they have cash available on hand.
You probably know about these strategies already. The mortgage prepayment strategy requires you to pay extra to pay off your mortgage. This means that you have to weigh you priorities ” that is if you should use the amount thats left from your income to pay off your mortgage faster, invest in on your 401(k), or save it for your kids college education. At certain times, this decision can be very hard to make.
Second: Mortgage Acceleration
Mortgage acceleration basically uses the concept of leverage. It is considered a new technique in paying off mortgage debts as it has only been around for 10 years. Most people who have used this technique spent less, maintain their financial lifestyle, and are able to settle their mortgage accounts earlier.
The way mortgage acceleration can be achieved through leverages is very simple. If you have one credit card that has an interest rate of 2% and another with a rate of 6%, how do you suppose will you be able to pay both and at the same time save thousands of dollars?
You got that right. You would move money from the credit card that has a lower interest rate to the high interest rate card. By so doing, you get to save on interest for about 4%. In the next 10 to 12 years, you will be able to save up a significant sum in interest.
This technique can also be used when you want to pay off your mortgage faster. If your mortgage has an interest rate of 6%, you can simply open a home equity line of credit, pay off your bills at the end of each month with the paycheck that you deposit at the beginning of the month. If you are able to set up everything accurately, you will be able to convert your home equity credit line interest to 2%.
When everything is set up, you will be free to borrow money from the home equity line of credit and use that money to pay off your mortgage debt.
The result? You save over $63,000 worth of interest. Plus you get to stop paying mortgage 13 years earlier.
The best part is, you never have to make significant lifestyle adjustments.
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