#1. Early payoff hacks
There are several early payoff hacks that homeowners can take advantage of:
How it Works
By making one extra payment per year, a homeowner can reduce the amount of interest they will pay over the life of the loan and the duration of the loan. In this example, the monthly payment is $3,160, so by making 1 extra monthly payment of $3,160, the mortgage will be paid off six years ahead of schedule and net over $156,000 in savings.
Tip: By making the extra payment in January, you are hacking the total number of days the mortgage is collected on.
Using the following terms:
Mortgage Term - 30-year Interest Rate - 7% Loan amount - $475,000 Monthly payment - $3,160
#2. EARLY PAYOFF HACKS
How it Works
By increasing the monthly payment to a round number, a borrower can save money on the interest paid over the life of the loan and shorten the duration of the term of the loan. The precise amount of money and time saved will depend on the amount of rounding.
By rounding up a monthly payment of $3,160 to $3,200 every month, $32,483 will be saved in interest and the duration of the loan will decrease by roughly 2 years.
Using the following terms: Mortgage Term - 30-year Interest Rate - 7% Loan amount - $475,000 Monthly payment - $3,160
#3. EARLY PAYOFF HACKS
How it Works
Each month, increase the payment by $1. $900 the first month, $901 the second month, and so on. This could reduce the term of the mortgage by eight years.
#4. EARLY PAYOFF HACKS
How it Works
Use unexpected money to help pay down loans. This is the easiest way to pay down debt, including a mortgage more quickly. More than likely this money is not accounted for in a monthly or yearly budget, so it’s easier to use in this scenario. *Beware of prepayment penalties. Each lender may have different rules.
#5. EARLY PAYOFF HACKS
How it Works
By paying monthly, the borrower pays a total of $3,160 per month. With a biweekly plan, they will pay $1,580 every two weeks. By switching to biweekly payments, the borrower will pay $493,804 in interest and will shorten the repayment period to just 24 years. The net savings would be $168,863 and six years off the mortgage.
Using the following terms:Mortgage Term - 30-year Interest Rate - 7% Loan amount - $475,000 Monthly payment - $3,160
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