Did you know that paying your mortgage every 4 weeks instead of once a month reduces a 30-year loan by almost 5 YEARS?
Paying your mortgage every month for 1 year = 12 payments.
Paying your mortgage every 28 days for 1 year = 13 payments.
The trick to reducing a 30-year loan down to 25.5 years is finding a painless way to make one additional mortgage payment per year!
Since it might never feel like a good time to make that extra payment, here are 4 different ways to make that one extra payment:
Make one addition mortgage payment anytime during the year.
Double up on your mortgage payment one time during the year.
Pay your mortgage every 28 days instead of once a month.
Set up a Bi-Weekly Payment Plan and make 1/2 payment every 14 days. Some finance institutions offer a bi-weekly payment plan. Simply call the customer service number on your mortgage statement and ask if a bi-weekly payment plan is available to you.
Fun fact: Make two additional mortgage payments per year and reduce a 30-year term to 22.5 years.
It’s hard to argue against paying off any and all debt as soon as possible. I would recommend paying off higher interest rate loans, such as credit card debt, prior to considering making additional mortgage payments. If you have any questions, feel free to email me at [email protected].
https://homeloananswerguy.com/wp-content/uploads/2017/09/How-to-pay-off-a-30-year-mortgage-in-25-years-with-little-effort.jpeg7681280Christian Crandallhttps://homeloananswerguy.com/wp-content/uploads/2021/02/logo_new.pngChristian Crandall2017-09-15 16:24:272017-09-15 16:24:27How to Pay Off a 30-Year Mortgage in 25 Years with Little Effort!
Building wealth takes discipline and sacrifice, but sometimes a little creativity goes a long way. As a mortgage broker, I am frequently asked if I have any tricks up my sleeve to help bring down the cost of a mortgage.
Here is one way to buy a condo (or house) for up to a $475,000 purchase price with $25,000 down and pay $1,950 per month! That payment includes utilities, Internet and cable TV, applicable tax deductions and taking a roommate
Here are the basic requirements:
A minimum $85,000 income.
If you do not make $85,000 per year, you will need more income to qualify. One solution is a co-signer. A family member, for example, with good income and low debt can help you qualify for the loan.
You must be debt free.
If you have credit card debt, reduce your spending and start paying off those cards asap.
If you have a car payment, sell the car or return a leased car back to the dealer asap.
Take whatever money you have available and buy a car for cash. My financial advisor has reminded me over the years: If you need to finance a car, you can’t afford that car. I’m not saying we can always avoid going into debt but it’s a good point. Drive a clunker for a few years while save you tons of money.
Here’s my personal story on this topic: Many years ago, I too needed to get my finances in order. I was overspending and it needed to stop. For a 2-month period I (painfully) wrote down every single penny I spent. The results were rather shocking to me. I had spent $22 on parking in 3 days, for example. To this day after (finally) becoming successful, I would rather park on the street for free 3 blocks away and walk 4 minutes to my destination than to pay a valet to park my car.
Cooking at home replaced the constant eating out. I never realized food is actually fairly inexpensive. Costco sells Japanese Wagyu Boneless Ribeye Roast at $99.00 per pound and chicken, turkey and ground beef under $3.00 per pound. Take your pick.
From there, saving money turned into a fun game – how to find ways to have a great time with spending little to no money.
I sold my car and purchased a used 20-year old Honda Accord for $3,500 cash. Honestly, driving that car made me feel semi-embarrassed at first. But soon those feelings were replaced with happiness and the joy of not having a car payment.
Driving that Accord saved me tons of money, never broke down, and I sold the car for $3,500 2 years later! True story. Next, I bought a used Ford F150 for $10k cash. Gas prices went up that year so after filling up for $100 on a Monday (and again on a Wednesday!), I sold the truck bought a used Toyota Camry for $11,500. Five years later someone hit my car and totaled the Camry. The insurance company cut me a check for… take a guess… yes, $11,000! I had driven that car for 5 years for $500. Yes, I got very lucky. But it all started with my decision to live within my means and pay cash for whatever car I could afford.
Find a 2-bedroom condo for sale.
As of my writing this article there are 2-bedroom condos for sale for $475k or less in Studio City, Santa Clarita, Burbank, Glendale, Koreatown, Sherman Oaks, Long Beach, Reseda, Stevenson Ranch, Torrance…etc.
Find a roommate who will pay you $1,250 per month rent.
Educate yourself about the tax benefits that come with owning a property.
You can deduct the property taxes and mortgage interest, which literally puts money back in your pocket. So let’s count those savings when calculating the monthly payment.
Let’s take a look at the numbers:
Purchase price: $475,000
Down payment: $23,750 aka 5% down
Closing cost: Negotiate seller to pay in full.
Principal & interest: $2,400
Property taxes: $495
Homeowner association fee: $300
HO6 insurance: $25
Mortgage insurance: $0
Utilities, Internet and TV: $300
Estimated Tax break: $4,800 per year
Payment calculation: $3,200 mortgage payment + $300 utilities, Internet and TV – $1,250 roommate – $400 tax break = $1,950 per month.
Disclaimer: I am not a CPA. Please consult your CPA for current tax laws and your specific tax savings. Principal & interest payment are based on current rates for qualified buyers only. HOA payments will vary. Utilities, Internet and TV costs will vary. HOA insurance cost will vary. Property taxes may vary. Roommate figures may change. All numbers mentioned are subject to change. All loan programs are for qualified buyers only.
Here’s one thing I know. Many financially successful spend way below their means. What feels cool to them is saving money, not spending money and always owning and never renting. When I bought my $3,500 Honda Accord, my successful friends praised and validated me while my financially challenged friends pitied and felt sorry for me – which is hilarious. And those same financially challenged friends are still financially challenged 10 years later – which is less hilarious.
Real estate has been a great investment over the past 50 years. Let’s figure out a plan how to get YOU into a property whenever the time is right for you. Feel free to contact me anytime with questions at [email protected].
https://homeloananswerguy.com/wp-content/uploads/2017/09/condo.jpg5581280Christian Crandallhttps://homeloananswerguy.com/wp-content/uploads/2021/02/logo_new.pngChristian Crandall2017-09-01 16:04:542017-09-06 05:12:33How to buy a $475k condo with $25k down and pay $1,950 per month!