The easiest way to pay off a 30-year mortgage in half the time is to get a 15 mortgage. The interest rate is about 0.50% lower than a 30-year mortgage rate. With a 15-year mortgage you will save $44,324.13 in interest expenses per $100,000 borrowed. Over the course of a 30-year $100,000 mortgage the interest paid is $73,534. On a 15-year $100,000 mortgage the interest paid is $29,209. That’s less then half.
So why don’t borrowers select a 15-year mortgage?
There is a big difference in the monthly payment between a 15-year and a 30-year mortgage. For most homeowners their goal is to have a low monthly payment that fits their budget. The payment on the 30-year $100,000 mortgage is $482 per month. The payment on a 15-year $100,000 mortgage is $717 per month.
What other ways are there to pay down a mortgage faster?
Here are 3 other ways to pay down your mortgage faster:
Pay Biweekly – instead of making a mortgage payment every month, make one every two weeks. By paying every 2 weeks, you will actually make the equivalent of 13 payments per year rather than just 12 monthly payments. By paying every two weeks, you are able to shave about 5 years off your mortgage and save.
Pay a little extra – In our current example we are using the current interest rate of 4.08% for 30 years on a $100,000 loan. The payment is $482.04 per month. If you round up and pay $500.00 per month, that extra $17.96 per month can save you almost $6,000 over the life of the loan and pay off your mortgage in 28 years.
Apply your tax refundto your mortgage principal. Applying large chunks of money to the principal will reduce the number of years and the total interest that you are going to pay over the life of the loan. Back to our $100,000 mortgage- if every May, for the life of the loan, you paid $1000 towards the principal, then you could save a little over $20,000 in interest and lop off 7½ years of payments.
If reducing the duration of your mortgage and the amount of interest you are paying is important to you, the strategies aren’t complicated and the amount of money doesn’t need to be huge.
Alexander Necker is a Realtor servicing the Baltimore Metro Area. His Big Why is to build relationships on trust. If you are considering buying or selling a home and are looking a Realtor that you are able to trust and give you a the highest level of service, please drop Alex a line at email@example.com or call or text him at 410-920-4760.
Author:Alexander Necker Phone: 410-920-4760 Dated: April 16th 2019 Views: 438 About Alexander: ...
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About Alexander Necker, Real Estate Sales Consultant
I specialize in selling the Baltimore Metropolitan’s Premier Homes.
I am an Eagle Scout. I mention this because the process of becoming an Eagle Scout provided me with the foundation by which I live my life. The values of trustworthiness, integrity, and helpfulness have allowed me to become the man I am today.
The words that describe me are:
Driver of my own professional destiny
C onduit for connecting people for professional development
Devoted husband with a wonderful wife
Father to 2 beautiful children with growing college funds
Student of Finance and Investments
After graduating college and starting a career in my field of study (agronomy), I quickly rose to the position of assistant and then superintendent of private golf courses. After 17 years in the golf business, I decided it was time to change to a career where I would not be at the mercy of the uncontrollable forces of sun, wind and rain. I chose a field where I would be the master of my fate, where the hard work and the long hours to which I am accustomed would be the determinant of my success.
The primary reason I am in the real estate business is to help people. A real estate transaction is one of the largest financial transactions you will ever undertake. Everyone deserves a real estate partner that understands and appreciates that fact. My focus on integrity, trust and communication are nothing less than I would want for myself, my family or friends entering into a large financial proceeding. I am committed to being the one real estate agent that keeps my client's best interests front and center.
In real estate, I consider myself to be a true professional in the same vein as the physician, the attorney and the accountant whom you must trust with the most important assets of your life. Nothing less is acceptable.
Alexander Necker Proudly Presents200 Gaitner PlaceAbingdon MD 210
"We had to do most of the sale from California and Alex was very responsive to the problems that came up with the inspection. He found an electrician, a construction company to add one support to the deck and a company to hook up a sewer line to the street."