How To Be Mortgage Free

How To Be Mortgage Free, by Des Moines Real Estate Experts RE/MAX Real Estate Concepts

If you think living in your Des Moines area home mortgage free is some distant dream of the future ñ think again.  It is possible to pay off your mortgage much earlier than you planned even if you don’t hit the lottery!  There are three strategies that will trim years off of your mortgage repayment schedule.

A mortgage consists of principal and interest paid back over a number of years.  The amount of principal to be paid back is a fixed amount.  Interest is the key factor for becoming mortgage free.  Since the interest you pay back is based upon the length of time you have outstanding principal, the sooner the principal is paid back, the quicker you will pay off your mortgage.

The first strategy for paying off your mortgage early is to make one extra mortgage payment per year.  Many homeowners get an income tax refund and use the extra cash for a splurge.  If you were to use that refund instead to make an extra mortgage payment, you could pay off your mortgage 5-7 years earlier than scheduled.  The reason for the early pay-off of the mortgage is because the extra principal you pay will not be accruing interest over the next several years.

The second strategy is similar to the first in that an extra payment is made each year.  However, where this strategy differs from the first is in how and when the extra payment is made.  With the second strategy a homeowner pays half of their monthly mortgage payment every two weeks.  The result is 26 half payments being made per year.  Although the extra principal being paid bi-weekly is smaller than the once a year extra payment, the extra principal is not accruing interest throughout the year.

The third strategy for paying off your mortgage early is to pay more then your required amount of mortgage each month.  In other words, if your budget is too tight to allow for a total extra payment, you can still benefit from paying off principal early.  If you were to pay an extra $50 per month, over a year you would have paid an extra $600 in principal.  Imagine items you spend $50 on per month and try and reduce or eliminate one.  After all, which is more important to you ñ season tickets to a ball game or paying off your mortgage a few years early?

A benefit of paying off your mortgage early is that equity will build in your home faster.  Use this equity to ìtrade upî to a larger home faster.

There is a lot of free information available to you about buying, selling or investing in Des Moines real estate. For complete information about the Des Moines real estate market including current homes for sale, property values and more please visit the most complete website online dedicated to everything Des Moines real estate at Real Estate with RE/MAX. Please feel free to contact us with any of your real estate or mortgage related questions and we will be more than glad to answer your questions. Call us at 1-800-708-5890 or email us at dsm@realestateconcepts.net.