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Cut Years Off Your Mortgage With 2 Easy Tricks!

folded-bill-houseI want to share some some little known facts that can literally cut years off your mortgage. So, my dad is a real estate guy–meaning he owns or has mortgages on cash flowing real estate and lives on the passive income that it generates. He told me about a few little tricks when it came to paying mortgages that apply not only to real estate investing, but also to the mortgage you have on the very house in which you live!

Like any son, at first I didn’t believe him. But then I confirmed what he was saying with Russ Wilson, my accountant at porte brown. He forwarded me an article from mortgage-x.com which I found fascinating. Since learning this, I have been telling all my professional friends with mortgages about it but no one seems to listen to me (as usual). “That sounds like a great idea but I’m  sure my accountant would have told me about it” is the usual response I get. Well, my loyal motivated readers, what if you could literally PAY YOUR 30 YEAR MORTGAGE OFF 8-9 YEARS EARLIER simply by paying your mortgage on a biweekly calendar or by simply adding an additional 1/12th of your monthly mortgage payment to each monthly installment.  Just take a look at the number below.

Here is a table from http://mortgage-x.com/library/bimonthly.htm that I find simply astounding!  This first table shows that even if you just split your mortgage in half and added no extra money per month, you would cut off one month of your 30 year mortgage. But take a look at what happens when you pay on biweekly basis (which essentially results in one full extra monthly mortgage payment per year).

Regular Monthly Payments: Bimonthly Payment Plan: True Bi-Weekly Payments:
Beginning Loan Amount: $75,000 $75,000 $75,000
Interest Rate: 10% 10% 10%
Monthly Payment: $658 $658 (329 x 2) $658 (329 x 2)
Total Interest Paid: $161,942 $161,451 $104,331
Total Interest Saved: 0 $491 $57,611
Loan will be paid off: in 360 months. in 359 months. in 272 months.

 

 

 

 

There is another simple method to cut years off your mortgage: add an amount equal to 1/12 the monthly mortgage payment to each monthly payment and look at these results. the table says more than I can say so look at it, think about it, and leave me your comments. Also, don’t forget to sign up for my newsletter!

Regular Monthly Payments: Bimonthly Payment Plan: Plan with additional 1/12
of Monthly Payments:
Beginning Loan Amount: $75,000 $75,000 $75,000
Interest Rate: 10% 10% 10%
Monthly Payment: $658 $658 (329 x 2) $713
Total Interest Paid: $161,942 $161,451 $104,641
Total Interest Saved: 0 $491 $57,301
Loan will be paid off: in 360 months. in 359 months. in 252 months.