Accelerate Mortgage Payments

Whether you own a home or not, the information I want to share with you will either benefit you now or in the future. In 2002 I purchased my first home. Since purchasing, my monthly mortgage payment is automatically deducted each month from my checking account. Just recently I received some information in the mail that suggested by using mortgage payment acceleration I could pay off my home seven to eight years sooner. Who wouldn’t want to accomplish that? In order to accomplish this I would have to sign up for their mortgage payoff acceleration program. Once enrolled my monthly mortgage payment would be split in two and payed every two weeks. There was a catch though. There was a one time enrollment fee and a per payment transaction charge. I was still intrigued about paying off my mortgage early and began to look for a free mortgage accelerator.

After doing some research I learned of two free ways to accomplish the exact same thing as sending in a payment every two weeks. Before going any further, the reason I don’t just send in a payment bi-weekly on my own, is because my lender does not allow it. The first way to accomplish free mortgage payment acceleration is to make one extra mortgage payment per year. What you do is choose a month during the year and instead of sending one check for your mortgage, send two. Simple enough! Now what if you can’t come up with an extra payment all in one shot? Well there is another free mortgage acceleration plan. What you do is divide your monthly mortgage payment by 12. Take that number and add it to each monthly payment you make. Although you didn’t send in a full extra payment as in the previous example, you have accomplished the same thing by adding 1/12th to each monthly payment.

Here is an example of how much you would save

Home Price: $200,000
Interest Rate: 6.0%
Monthly Payment: $1199.10
Start Date: Aug 5, 2008
End Date: Mar 5, 2038
Years to Pay Off: 30
Total Interest Paid: $231,676.38

Now let’s see what happens when you add 1/12 to each payment

1/12th of Monthly Payment = 1/12 * $1199.10 = $99.925
New Monthly Payment = $1199.10 + $99.93 = $1299.03
Start Date: Aug 5, 2008
End Date: Mar 5, 2033
Years to Pay Off: 24 years 7 months
Total Interest Paid: $182,564.29

You Save $49,112.09 in interest and pay your mortgage off 5 Years 5 Months sooner!