The Passive Dollar

Feed Your Wallet

How To Cut Your Mortgage IN HALF

If you’ve read my article on what’s included your mortgage, you could easily see that paying your mortgage over 30 years can force you to pay for your home TWICE.

Yes, by using a traditional 30-year mortgage, you are paying for your home at least 2 times over.

If you’re money conscious like I am (and you are too if you’re reading this), you’ll want to save as much money as possible. I recently ran into an article from Tony Robbins mentioning how you can cut the cost of your mortgage in half!

He also mentions it in his book, “Unshakeable: Your Financial Freedom Playbook“. There are loads of personal finance tips in this book, even tips on improving your 401k returns!

I was a little skeptical but after doing the math, the method actually works.

When you make your monthly payment for your home, the majority of your payment goes into the banks pocket rather than paying down your principal. Your principal is the amount you borrowed from the bank to pay for the house.

Your monthly payments amortize over 30 years. This means less and less of your payment goes towards interest and goes towards principal as time goes on. Your payment will stay the same monthly, but only so much of it will pay your principal down.

By the 15-year mark, roughly 50% of your payment goes towards principal (assuming we take out taxes and HOA, etc).

But what if you could pay off your mortgage by year 15? It’s doable.

Also, by paying off your mortgage early, you will make half as many payments, which is far less than any tax write-off you would receive.

Let’s say your mortgage is $250,000, your full monthly payment is $1,350 and your principal is $350. All you would have to do is pay your $1,350 and write another check for $350. You’ll have to adjust this to whatever your principal amount is.

And the best thing is, you’re not paying extra, you’re just paying early. You won’t be paying interest on the principal that is pre-paid. Using this method could save you hundreds of thousands of dollars over time.

If you’re looking for a new book to check out and more personal finance tips, consider Unshakeable by Tony Robbins.

Do you plan on paying off your mortgage early?

 

About Brandon

Leave a Reply

CommentLuv badge