Tonight I was reading the new Tony Robbins book, Money: Master the Game, and in one of the chapters on how to accelerate your savings he mentions a strategy for how save potentially hundreds of thousands of dollars of interest payments on your mortgage. Do you want to hear how to do that? Um, yes please....
Here's the deal, when you make your monthly mortgage payment you include a second check for the next months principal balance. Assuming you have a $300,000 mortgage, that extra payment for the principal balance would be between $400 - $800, depending on what year of the loan you are currently in. Using this strategy you can pay off your mortgage in literally half the time. That $300,000 house you bought is actually costing you closer to $600,000. Over the life of a 30 year mortgage fully half all the money you are paying to the bank is for interest. So imagine how much money you would save were you able to pay of your mortgage in 15 years instead of 30..... it's a lot.
Now, not everyone can afford to make extra payments every month even though it will save you so much money. However, there is a way to realize a portion of those savings without spending any extra money every month. Want to hear it? Great!
All you have to do is pay half of your mortgage payment early on the 15th of the month and the second half on the 1st (your usual payment date). By making a portion of your payment early there is less principal for the bank to charge you interest on. With the "magic" of compounding interest the savings you can realize are pretty spectacular, especially considering it costs you nothing more than the price of a second check.
I break it down all pretty like below:
If you want to calculate your exact savings for your situation head over HERE for a Bi-Weekly Mortgage Calculator
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