Im sure the question of how to pay off your mortgage has crossed your mind at some point. The global economic crunch has got hundreds of thousands and Americans extremely concerned about their mortgage debt.
We all want to live a debt-free life and we want to save thousands of dollars. Paying off your mortgage is an investment strategy that does not involve risks.
And one reason we keep asking how to pay off your mortgage and still not take any action is that we’re so confused with all the choices these days we just don’t know the right action steps to take.
Making sure that you are making the most logical choice is not something you should feel terrible about. After all, your home is your major financial asset.
Mortgage pay off techniques can really be summarized into two specific strategies.
First: Mortgage Prepayment
The first method on how to pay off your mortgage is referred to as mortgage prepayment method. All this simply means is that you use extra cash from your pocket to pay off your mortgage quicker. The most common ways is to contribute extra from your paycheck towards your mortgage each month, use the biweekly prepayment program or make extra payments whenever you have extra cash available to you.
You already know about these strategies. The key with the mortgage prepayment strategy is to make sure you have the extra cash to pay off your mortgage. With this strategy the key choice becomes whether you should use the extra money to pay off your mortgage quicker or invest these savings in your 401(k) or save for your kids college education. This choice can become very confusing at times.
Two: Mortgage Acceleration
This strategy of mortgage acceleration is honestly new and his been around for the last 10 years only. This strategy uses the concept of leverage to pay off your mortgage quicker. In some cases you can end up paying off your mortgage without spending more and changing your lifestyle.
The way mortgage acceleration can be achieved through leverages is very simple. If you have one credit card that has an interest rate of 2% and another with a rate of 6%, how do you suppose will you be able to pay both and at the same time save thousands of dollars?
Thats right. You borrow funds from the credit card that only has an interest rate of 2% to pay off your debt from the other credit card. This will get you to save more or less 4% of interest and in the next 10 to 12 years, you will already have a considerable sum of interest savings.
This technique can also be used when you want to pay off your mortgage quicker. If your mortgage has an interest rate of 6%, you can simply open a home equity line of credit, pay off your bills at the end of each month with the paycheck that you deposit at the beginning of the month. If you are able to set up everything accurately, you will be able to convert your home equity credit line interest to 2%.
Now, what is left for you to do will be to loan money from your home equity line of credit and use this to pay off your mortgage.
And the end result is simple. You could slash 13 years of your mortgage and save over $63,000 of interest using this one simple financial step.
And you don’t have to change lifestyle in the process.