How To Pay Your Mortgage Early While Saving Thousands In Interest
In this article you will see a couple of different ways to save thousands in interest on your mortgage and pay it off earlier. When we first get our mortgage and start making monthly payments, most of the money you send in is going towards the interest and very little goes towards the actual house payment.
The banks plan to get their money first. So although there are multiple ways to pay off your mortgage quicker, refinancing is not always the best choice. When you refinance a mortgage you start all over again paying loads of interest first before you ever get to pay on the house its self. If you can refinance for a much lower interest rate then it is usually worth while because that will save you a lot of money. Another reason to refinance would be to get out of the 20 or more years remaining on your current mortgage and get a 10 or 15 years mortgage.
While your payment would go up. you would pay it off sooner so the interest would not be as much. For me I think the best way is to try to pay the mortgage from both ends. When you get a mortgage you should also get an amortization schedule. This shows you all the years of your mortgage and how much of each payment is for interest and how much is for principal (the actual cost of the house). In the beginning almost all of your monthly payment will be interest. At the end of your mortgage after you have paid many thousands of dollars in interest, finally you will pay off the house. If you look at your schedule you will see in the last years of the mortgage the payment is almost all principle.
During the life of the mortgage you could set up a bi-weekly payment which would cut off around six years and save a lot of interest. Another is to make an extra payment or even two every year. If you get a tax refund every year you could make one extra payment with it, making sure that it goes to the principal. That single extra payment in 12 years would have cut off the last year of your mortgage. If you could do 2 extra payments even better. I Pick Up Pennies give us even more ideas to help pay off a mortgage faster and save a ton on interest.
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