How To Save Thousands Of Dollars On Your Mortgage



How To Save Thousands Of Dollars On Your Mortgage

How to​ Save Thousands of​ Dollars on​ Your Mortgage!
The dream of​ owning a​ home is​ becoming very allusive these days .​
Although everyone would like to​ have a​ home that is​ paid for free and clear,​ many people are forced to​ assume mortgages that will be paid over 25 or​ 30 years into the​ future .​
Everyone is​ constrained to​ a​ certain degree by their budget .​
Yet there is​ a​ way to​ pay off the​ existing mortgage on​ your home quicker and save money in​ the​ process .​
Almost all mortgages have built into them an​ Accelerated Payment Clause .​
This allows the​ borrower to​ pay more than the​ minimum amount of​ the​ monthly mortgage payment .​
To do this you​ simply remit more to​ the​ lender than the​ usual mortgage payment every month .​
The benefit to​ this is​ that every extra dollar paid against the​ mortgage will lower the​ outstanding balance of​ the​ mortgage .​
This increases the​ equity in​ your home faster over time .​
Also,​ by lowering your outstanding balance,​ you​ will save on​ interest charges .​
Here is​ a​ good example based on​ the​ scenario of​ an​ average family .​
If you​ are an​ average family of​ four making $50,​000 a​ year,​ let us assume that you​ are saving annually at​ the​ same rate as​ most Americans .​
This rate of​ savings as​ reported by our government is​ about 4% of​ your income every year .​
This would mean that you​ are putting $2000.00 in​ the​ bank every year for future purposes .​
This comes out to​ around $167.00 a​ month .​
Right now you​ are probably receiving less than 1% Annual Percentage Rate (APR) on​ your passbook savings .​
Why not take $100.00 of​ this money that you​ would normally save and pay down the​ mortgage on​ your home ahead of​ time? the​ following example shows why this is​ in​ your best interest .​
If you​ take out a​ mortgage on​ a​ house for $200,​000 at​ a​ 6% fixed rate,​ and the​ contract calls for repayment in​ monthly installments over 30 years,​ your monthly mortgage payment would be $1,​210.56 .​
If you​ paid an​ extra $100.00 dollars per month toward the​ amortization of​ your mortgage,​ you​ would add $1,​200.00 to​ the​ equity in​ your home every year .​
In this scenario,​ the​ total amount paid to​ buy your home over the​ life of​ the​ mortgage would be $435,​798.89 .​
When you​ add $100.00 to​ your mortgage payment every month you​ would save $46,​360.13 in​ interest charges over the​ life of​ the​ mortgage .​
You would also be able to​ retire your mortgage earlier .​
You would be able to​ trim 38 monthly payments off your repayment of​ the​ mortgage .​
So the​ mortgage would be paid off 3 years and 2 months sooner if​ you​ use this repayment method .​
In short,​ what this strategy does is​ shift your money from passbook savings only ($2,​000.00 per year),​ to​ paying $1,​200.00 on​ your mortgage,​ and saving $800.00 directly into your bank account each year .​
To sum up the​ benefits of​ using this method,​ the​ borrower in​ the​ example above saved $46,​360.13 in​ interest on​ their loan,​ and accumulated $21,​923.85 in​ passbook savings ( $67.00 per month X 1% APR X 322 months ) .​
This equals $68,​283.98 in​ accumulated savings over 26 years and 10 months (This is​ the​ actual time it​ would take to​ pay off the​ original 30 year mortgage) .​
If the​ family would have put all of​ their money ($167.00 per month) in​ a​ passbook savings account only,​ they would have accumulated $54,​646.35 over the​ same period of​ time .​
So this family would have actually saved $13,​637.63 more by using this accelerated payment method .​
And they would have also paid off their mortgage 3 years and 2 months earlier than normal .​
This method can be used in​ any situation where the​ mortgage has an​ Accelerated Payment Clause built into it .​
It will work best if​ you​ are consistent with the​ amount that you​ pay on​ your mortgage every month .​
Any change in​ the​ amount of​ monthly repayment of​ the​ mortgage will affect the​ amount that you​ will actually save .​
Check with your banker to​ find out if​ your mortgage allows for Accelerated Payments .​
Then you​ can use this strategy to​ save a​ lot of​ money on​ your mortgage and own your home sooner .​
You may copy this article and place it​ on​ your own website,​ as​ long as​ you​ do not change it​ and include this resource box including the​ live link to​ the​ Credit Repair Advice site.

How To Save Thousands Of Dollars On Your Mortgage





Related Posts:




No comments: Comments Links DoFollow

Powered by Blogger.