Ways to Pay off a Mortgage Early

February 23, 2008 | In Loan, Mortgage |

Ā Mortgage Debt

Probably one of the biggest expenses we encounter during our lifetime is our home mortgage. Have you ever stopped to figure out just how much money it costs to own a home? The mortgage we obtained for our home was $115,000. Payments on this loan are approximately $1120 a month. Every month. For thirty years. A little simple math tells us that we will make a total of 360 payments on this mortgage. A little more math tells us that we will repay $403,200 by the time all is said and done.

A little math again, and we find that we will have paid $288,200 in interest alone on this mortgage. And interest rates were actually pretty low at the time we bought the house! Believe it or not, there are actually a few simple tricks to save money on interest, and to actually pay off your mortgage in less than thirty years.

Shorter Term Mortgages

One simple option for saving money on a mortgage is to borrow the money for less than thirty years. Fifteen and twenty year mortgages are one choice for paying off your home in less time. Just think of the years of payments you will save! The life of the common mortgage can actually be cut in half! Sound too good to be true? The down-side of this is that your monthly payments will be higher.

However, if you do the math, you’ll see that a substantial amount of money will be saved in the long run because the interest is compounded over a shorter time. Thousands of dollars will be cut from the total amount you will repay, but it will cost you a little more each month.

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