Pay Off Your Mortgage Much Faster

 In Common Questions, Refinancing your Mortgage

If you are like most people with a mortgage, you would love to have your mortgage paid off as quickly as possible and get rid of your mortgage payment.  Here’s how to do it without increasing your payment.

Non-Mortgage Debt

Most of us have other debts besides our mortgage payment.  We have credit card bills, car loans, and student loans, to name a few.  

If you pay off your other non-mortgage debt with the equity you have in your house, and then apply the payments you were paying towards your non-mortgage debt to your mortgage, you will be amazed at how much sooner you can pay off your mortgage without increasing your total monthly payment.

An Example

Let’s assume you have a $350,000 30-year mortgage with an interest rate of 3.25%.  Your monthly principal and interest payment would be $1523.  Let’s also assume you have $20,000 in credit card debt with total monthly payments of $500.  Your total monthly payments, including your mortgage and your credit cards, would be $2023.  ($1523 mortgage payment + $500 credit card payments = $2023 total payment.)

If you refinance your mortgage into another mortgage at the same interest rate of 3.25%, and took out enough cash to pay off all your credit cards, you would now have a mortgage of $375,000 (assuming $5,000 in closing costs included in the new loan).  The monthly payment would be $1632.  

You would no longer have any credit card payments because you paid them all off with the cash you got when you refinanced, so your total monthly payment would go from $2023 (your old mortgage payment and credit card payments) down to $1632.  That’s $391 lower than you were paying before you refinanced.  

Pay Off Your Mortgage Much Faster

Now, if you take that $391 savings and apply it to your mortgage as an extra principal payment each month, your total payment will be the same as it was before you refinanced, but your mortgage would be paid off eight years sooner because of all the extra principal payments you make.

Bottom line is that your total payments stay exactly the same, and your mortgage is paid off 8 years sooner.  Imagine having no mortgage payment 8 years sooner than you expected.  How nice would that be? 

What We Can Do

We can put together a report for you showing you exactly how much time you will knock off your mortgage debt.  We do this all the time for our clients, and in almost every case, they are blown away at how much sooner they will pay off their mortgage, with the exact same monthly debt payment they are making now.

If you would like to see how much time you can knock off your mortgage, contact us today.  You will be glad you did.

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