How To Prepay Your Mortgage Without Spending Your Own Money
Building The Equity Back In Your Home:
Is prepaying your mortgage in these financial times the best strategy for you? Right now the equity in your home may be slashed and your retirement savings severely depleted by the falling stock market.
The appeal of paying off your mortgage and living debt free may give you peace of mind especially in an unstable economy. The thought of having a mortgage paid off before retirement sounds great especially as you could use these dollars on yourself rather than using your retirement savings to pay for a mortgage payment.
If prepaying your mortgage is your financial goal that is one thing you first step you must consider before you make a pre-payment on your mortgage. Without the strategy you could find yourself in a position where you are debt free but cash poor.
The strategy that i am referring to is to make sure that before you prepay your mortgage you at least have six months of an emergency reserve. Typically six months of emergency reserve should include enough cash to pay off at least six months of bills including your mortgage payment. And in these financial times maybe six months of reserves are not enough and you may need 9 months to a year or cash reserves.
There are various ways to prepay your mortgage. The two most common strategies are as follows:
Prepayment Strategy one:
You could use extra money from your paycheck each month to pay off your mortgage principal. This is the easy strategy and works extremely well when you have extra cash and paying off debts is your first goal.
In order ensure that your mortgage is paid off by the time you retire you need to prepay your mortgage every single month. This approach does require that you are disciplined with your finances and you have the ability to make an extra mortgage payment consistently every single month.
Prepayment Strategy Two:
The second strategy involves making a big down payment at the closing of your mortgage or making periodic mortgage payments whenever you have some cash available to pay to work your mortgage.
You could use a bonus, a small inheritance or save enough money and then you can make periodic payments directly to your mortgage principal.
Even though you don't make extra payments consistently towards your mortgage principal you can still prepay your mortgage and save thousands of dollars. Every time a payment is made it reduces a significant amount of interest and takes years off your mortgage life.
Both these methods require that you pay extra towards the mortgage in order to prepay your mortgage before you retirement.
There is the third mortgage strategy which does not require you to pay extra or change your lifestyle. This mortgage prepayment strategy is referred to as mortgage acceleration.
With this new prepayment strategy you can pay off your mortgage 13 years faster and save thousands of dollars.
This mortgage prepayment strategy requires you use a Home Equity Line of Credit . You deposit your paycheck and pay your bills directly from the HELOC. The heloc functions as your primary checking account and since the interest rate on the heloc is low you could end up prepaying your mortgage without changing your lifestyle.
Prepaying your mortgage is one of the smartest financial decisions you can make if you are looking to have a diversified investment portfolio. There is no better way to save money and prepay your mortgage debt.
To find out exactly how you can prepay your mortgage debt, go directly to www.EQXL.com/mortgageprepaymentcalculator and enter your information directly into the mortgage prepayment calculator.
In 30 seconds you will find out exactly how many years you can slash off your mortgage and how much you can save. And while you're there download a free mortgage prepayment guide that will reveal the insider techniques to get on the path to prepaying your mortgage today.
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