Now, if you aren’t already making a budget every month, start there. You may have read that last section and thought, But I don’t have any extra money to put toward my house payments! Hang on-you can probably find more money in your budget each month than you realize. With focus and intentionality, you can hit the same goal all by yourself. Don’t get sucked into paying for a fancy-schmancy mortgage accelerator program, like biweekly payments (more on those later).Include a note on your extra payment that you want it applied to the principal balance-not to the following month’s payment.Some companies only accept extra payments at specific times or may charge prepayment penalties. Check with your mortgage company first.If you want to see how much time and money you’d save making extra house payments in your specific situation, check out our free mortgage payoff calculator.īut before you start making those extra payments, let’s go over some ground rules: If you made an extra payment just once every quarter, you’d pay off your house nearly 15 years early! That would mean cutting the length of your mortgage in half and saving a whopping $184,000 in interest along the way. We’ll say you have a $240,000, 30-year mortgage with a 7% interest rate and a monthly payment of $1,597 for your principal and interest. How does that work? Let’s crunch the numbers. And that means if you make just one extra payment annually, you’ll knock years off the term of your mortgage-plus save thousands of dollars in interest. Okay, you probably don’t need me to tell you that every dollar you throw at your mortgage payment puts a bigger dent in your principal balance. Let’s go over five not-so-secret but super helpful tips for making that happen. But if you have accomplished those goals, you’re ready to start taking steps toward paying off your house early. If you haven’t checked all four of those boxes, then that’s where you should focus your attention for now. Start putting money aside for your kids’ college (if you have kids). Begin investing 15% of your income for retirement. Build an emergency fund worth 3–6 months of your typical expenses.
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