Pay Off Your 30 Year Home Mortgage in Only 18 Years

Paying one additional mortgage payment each year, whether in a lump sum or monthly increments, can lower a 30-year loan down to 18 years. If you pay more than one extra payment, the number of years will decrease even more.

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Since this additional payment will be applied only to the principal and not the interest, you end up saving thousands and thousands of dollars once the home is paid off! And it also lowers the total amount of interest the borrower will pay, because it lowers the principal and length of time it will take to pay off the loan. So you save twice with each overpayment. Make sure you have pre-payment privileges in order to save.

By Julia from Boca Raton, FL

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August 3, 20110 found this helpful

Very good advice. In addition, when writing out the check make a notation on the check "principal payment only". Then there's not mistaking where/how it's to be applied to your account.

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Thanks for sharing.

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August 3, 20110 found this helpful

And make sure the principal overpayment is actually applied to the principal instead of future interest! A mortgage co. we had was constantly messing up - so I learned the hard way to be a good detective.

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August 3, 20110 found this helpful

When I owned assorted residential and commercial properties I did the same thing Keeper mentioned and you want to make sure it's a separate check from your regular mortgage payment. You also want to make sure to read your mortgage contract with a fine tooth comb because some contracts have some hefty early payment penalties and/or fees so you'll want to be prepared for them at the time of payoff.

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August 3, 20110 found this helpful

We learned this from our daughter when she was in the 7th grade, not
from our mortgage broker, and not from the banker who held the mortgage

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on a previous home. It was in a 7th grade mathematics text book. Isn't
it amazing that the mortgage companies or the banks who are supposed to
be protecting us never tell us things like this? The more money they collect
in interest, the more money they make as individuals. Greed still rules, so
it's up to us to learn things for ourselves.

The two things to remember is to have your lawyer look over any contract
before you sign it to make sure you can make additional payments to be
applied only to the principal, and that you will not be penalized in any way
now or later. Also, to be on the safe side, make the additional payments
on separate checks noted "to be applied to principal ONLY".

Thanks Pookarina. Excellent advice at a very important time in our lives

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right now.

Lee

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August 3, 20110 found this helpful

This is definitely on my bucket list! I'll be sure to keep the caveats in mind, though. Thanks. JPJ.

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August 3, 20110 found this helpful

"Isn't it amazing that the mortgage companies or the banks who are supposed to be protecting us never tell us things like this?" Who said that the mortgage companies and banks are supposed to protect us? Have you seen their building? Is their furniture better than yours? They didn't get it by saving people money. That is why they sold you a thirty-year mortgage, so you can pay for your house three times. A fifteen-year mortgage pays off in fifteen years or less every time. That is better that paying off a thirty-year mortgage in eighteen years. The interest rate is lower too.

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Anonymous
September 24, 20120 found this helpful

Even though I had 30 year mortgages, I used an amortization calculator to figure out payments as if I were paying on a 15 year mortgage. The additional amount really isn't much. I've owned two different homes over the years and have always paid extra with every mortgage payment in order to reduce the amount of interest paid over time.

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Recently, I was able to refinance my home from a 30 year to a 15 after only have lived in it for 5 years. I've continued to make payments the same as I did before. If my financial situation stays the same, I will have it paid off in 12 years instead of 26 years with my original mortgage. Can you say "Ka-Ching!"?

Be sure to check that the additional amount is being applied to principal and that there are no pre-payment penalties. I reconcile my mortgage statement every month to make sure.

Reply Was this helpful? Yes
September 24, 20120 found this helpful

Even though I had 30 year mortgages, I used an amortization calculator to figure out payments as if I were paying on a 15 year mortgage. The additional amount really isn't much. I've owned two different homes over the years and have always paid extra with every mortgage payment in order to reduce the amount of interest paid over time.

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Recently, I was able to refinance my home from a 30 year to a 15 after only have lived in it for 5 years with a 5% downpayment. I've continued to make payments the same as I did before. If my financial situation stays the same, I will have it paid off in 12 years instead of 26 years with my original mortgage.

Be sure to check that the additional amount is being applied to principal and that there are no pre-payment penalties. I reconcile my mortgage statement every month to make sure.

Reply Was this helpful? Yes

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