Most people think the only way to save interest money on your home mortgage is to Refinance, which can carry high costs. But, there is a better way. It's called Pre-Payment.
Pre-payment is simple, it's paying a little more each month with your regular monthly mortgage payment. The little extra each month goes directly to Principal. Principal is the original amount you borrowed before they charge their interest. Interest is the Bank's Profit. You're cutting the Profit the Bank makes, which is why they Don't Want you to Find Out How Pre-Payment works.
Here's an Example: On a standard fixed rate mortgage, the payment each month is calculated to include the Principal and Interest. If you borrowed $200,000 at 5% interest for a 30 year fixed rate, your monthly payment would be $1,073.64 per month. Pay this amount each month for the 360 months (30 years) and the total you paid is $186,510.40 in INTEREST, plus the $200,000 you borrowed, for a total Payback to the Bank of $386,510.40.
Using the same $200,000 mortgage and adding an additional $89.47 to your monthly payment, $1,163.11 principal and interest. By paying this added $89.47 each month you would save $33,995.15 in Interest Payments to the Bank and Payoff the Entire Mortgage in 303 payments. That is 57 LESS Monthly Payments. That's $33,995.15 IN YOUR POCKET and pays off your mortgage almost FIVE YEARS LESS. Now you know why the Bank does not want you to find out about Pre-Payment.
You can start pre-payment at any time, not just at the beginning of the mortgage. You are not obligated to pay the extra every month. If you want to send more one month and less others, or skip some months, it's up to you. Bottom line is, the more you Pre-pay, the MORE MONEY you Save and Earlier you Payoff your Mortgage.
Be SURE to mark directly on your payment coupon, or online, that you want the extra money applied to the PRINCIPAL amount of the Mortgage.
After you have paid off the mortgage in the 303 months, a good idea is to invest the monthly payments directly into a Savings or Money Market account for the remaining 57 months. If you saved the $1,163.11 monthly, using an estimated interest rate of 1%, your Savings would add up to $66,297.27 instead of just a Paid Off Mortgage.
Isn't it a good thing you read this and have Thousands in Savings, Outwitting your Bank or Mortgage Lender, while People who don't know this Secret continue to pay the Bank all that PROFIT MONEY for the Bank.
Hope this Helps.
Kathy McKinney, Realtor Platinum First Realty, Harleysville Office 267-647-9800 ext 412 Platinum Search Website: www.kathymckinney.com Bank Foreclosures Website: www.reohomespa.com
Author:Kathleen McKinney Phone: 215-500-3424 Dated: September 2nd 2015 Views: 784 About Kathleen: My experience level is at your disposal ! My background in mortgages and rock solid understanding of...
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