Accelerate Your Mortgage, Free Your Income
by Justin Lukasavige
I was recently asked about a mortgage acceleration program
and how they work. The idea behind the program is to pay
off your home 2 or 3 years early, and save a bunch of
money on interest. But what are they exactly, and do they
really work?
Most mortgage acceleration programs use the same basic
principle. If you stick to it, you will actually pay off
a 30-year fixed-rate mortgage in about 27 years, and as
a result, you will save a few thousand dollars in interest
payments.
As to how they work, the idea is very simple. For a fee,
the companies will usually break your mortgage payment
in half and have you pay it every two weeks, rather than
one full payment every month. This tends to work out good
for those of us that get paid every two weeks or every
week. While making half payments every two weeks, the
program actually forces you to make one extra full payment
every year, thereby paying off your home early.
The process is simple, but is there a better way? Yes,
there is.
Most of these programs charge a fee to set it up with
your bank, and then another fee each time you make a payment.
While you will come out ahead in the end (most of the
time), you really can do this on your own without paying
someone else.
If you want to make an extra payment each year, there
are a few different ways to do it. If your mortgage payment
is $1,200 per month for instance, divide it by 12 to get
$100. That is how much extra you need to pay each month
to equal an extra payment.
If you have paid weekly or bi-weekly, you can also take
a portion of your extra two paychecks (26 paychecks at
bi-weekly instead of 24), and apply that to your mortgage
payment that month. By doing it on your own, you will
save yourself the fees and keep the ball in your court.
Of course, the good thing about any program is that once
you are on it, you receive a bill every two weeks, and
you are held liable to pay it on-time. Can you trust that
you will have the will-power to do it on your own without
a bill telling you to?
As with anything financial, always make sure that you
do things in the proper order. To view the seven Financial
Freedom Steps, visit www.lukascoaching.com/resources.htm and download it for free.
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