Excerpts Taken From: beautyandbedlam.com/paying-down-your-mortg
How would you like to save $100,000 in fifteen years?
Many people take out a thirty-year loan thinking they’ll just double up on payments and pay it off sooner. The reality of that is that even if you “pinky promise” yourself that you will pay extra, you won’t. Something else always finds priority. Statistics from the FDIC state that 97.3 percent of people do not systematically pay extra on their mortgage.
Realistically, are you going to be that .7 percent that actually pays? Most likely, no, not unless you get very intentional about it.
As we look at a 15 year mortgage vs. a 30 thirty year mortgage, I want you to sit down for this fact. Do you know that if you pay just $250 more per month, you will save $100,000?!!! ONE HUNDRED THOUSAND!!
Interest rates are at an all time low!! I can’t stress enough that you should call your bank now and check into your options!! I realize that many of you may not qualify for a 15 year mortgage because they do all this debt to ratio numbers stuff that starts sounding Greek to many, BUT many of you can switch up and do what we did. Set your mortgage bank account up so that it automatically withdraws an extra amount each month. That way, your sticky fingers never see that money, and you don’t have a chance to change your mind at the last minute. Even if it’s an extra $100 a month, it will equal thousands and thousands of dollars over time.
One of my wonderful friends, Joy of Five J’s, fivejs.com/about-2/
, has been on a debt snowball reduction plan this past year, strategically paying off debt left and right. I am so proud of what their family is doing. Their latest revelation was in terms of their mortgage. She is another one of my geeky friends, so one night we were talking refinancing ( I know, I know…don’t laugh). I asked her this morning if I could share the huge amount of money they will be saving by not only refinancing, but also paying extra each month. Look at what taking this one small step towards financial security will do for their budget. Here’s her explanation.
“We have 23 years left on our current 30 year loan. We’re refinancing our mortgage to save 1% on our interest rate (dropping it to 4.75%). Although we’re refinancing to another 30 year loan, the savings in our interest rate means that we can keep paying the same amount each month on our mortgage payment that we’ve been paying for the last 7 years, and we’ll save $30K in interest, PLUS our house will be paid off in 18 years from now, instead of 23. If we pay about $100 extra on our payment each month, we’ll save another $10K in interest and pay off the house in only 15 years. Also, since were refinancing through our current mortgage lender, we don’t have to pay for another appraisal or a home inspection. As an added bonus, because of the refinance, we’ll be skipping a mortgage payment, so I can use that month’s payment to pay down on our credit card balance.”
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