Financing in Austin>Question Details

Trulia Austin, Home Buyer in Austin, TX

Once moved in, what can be done to help pay off the mortgage quicker?

Asked by Trulia Austin, Austin, TX Thu Feb 28, 2013

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Any extra principal payment you make each month will knock time off the back end of your mortgage. For example if you have a new $250,000 mortgage at 3.5% and you make just an extra $50 principle payment each month you will pay the mortgage off about 2 years and 3 months early. Pay an extra $100 and you will pay off your mortgage in 26 years.

The easiest way to calculate this is to search for an online mortgage calculator and plug in different numbers to see what you can afford and stick with. Even if you can't stick with it every extra payment you make saves you money in the long run.

An important question to ask yourself is this though. Can I invest that money somewhere else to make a higher return? Being mortgage free faster is a great reason but make sure it works for you from a financial standpoint.

Hope this helps.

_______________________________________
Don Groff
REALTOR® & Mortgage Broker
Austin Real Estate Pros | 360 Lending Group
office: 512.669.5599 mobile: 512.633.4157
http://www.AustinListed.com | http://www.360LendingGroup.com
listings@dongroff.com
0 votes Thank Flag Link Wed Mar 13, 2013
You can!! A simple way is to pay your mortgage bi-weekly.. Check with your bank and see if they can assit with this. Hope this helps....

Warmest Regards,

Vanessa Nunez
512-750-5716
0 votes Thank Flag Link Fri Mar 1, 2013
Banks offer different loan programs where you can pay bi monthly to where you end up paying it two extra weeks per year which lowers your principal faster and helps you pay off your loan faster (I've even heard by 7 years). Or you could get a 15 year loan for a great rate.

However, if it were me, with money being so cheap, I wouldn't worry as much about paying off my mortgage as I would getting more than one house. If you think about it, money is only 3.75% or so. You could either pay off your house or buy another house to rent out. Instead of paying $10K toward my current mortgage, I'd rather use that money to buy another property and rent it out. Rents are high in Austin. I'd rather own 5 properties and rent 4 and make money per month leveraging the bank's money than own one property free and clear.

My 2 cents!
0 votes Thank Flag Link Thu Feb 28, 2013
I had a client who added their tax returns to their principle every yr.... They look great now.
Can do the same with a Christmas bonus....
0 votes Thank Flag Link Thu Feb 28, 2013
If you put additional principal on your loan each month or as often as you can you will pay off the mortgage sooner. If you make one extra payment a year you can usually cut the years owed down to 22 1/2 - 23 years instead of 30 years.
0 votes Thank Flag Link Thu Feb 28, 2013
In this particular market, once moved in, i recommend taking those additional payments you can afford to make and invest in a smaller second property.

Watch this market climb, flip the smaller unit in 3-4 years, and use the proceeds to pay down your current note.

Even a small condo can pay for itself while the tenant essentially pays those extra payments you desire.

A couple ways to make it happen!
0 votes Thank Flag Link Thu Feb 28, 2013
Rather than commit to bimonthly payments which can be difficult when you encounter sudden unexpected expenses, you might just discipline yourself to add in extra money on each monthly payment. This will accomplish your goal of paying it off earlier, and how early depends on how much you add in. Just adding $100 to your monthly payment will take years off the loan. As noted, you should indicate the extra amount should be used to pay off principal. Most loan servicers provide either coupons or a monthly bill with an area to note this amount to be paid towards principle. If you don't, and you have an escrow account they might put it in the escrow instead of applying it towards the principal, which will defeat the purpose of the extra amount.

Ron Cullinan
Avalar Austin
GRI, CRS, ABR, CLHMS, e-Pro
512-799-3239
austin_realtor@earthlink.net
http://www.austinonlinehomes.com
0 votes Thank Flag Link Thu Feb 28, 2013
Also whenever you have extra funds pay it on the principle and you must mark that check as such so that there is no confusion from your lender. (Apply to Principle Only)

Good Luck
0 votes Thank Flag Link Thu Feb 28, 2013
I like the bi-monthly thing.

The only thing is.... you are paying every 2 weeks. So in TWO of the months you will make 3 payments. That is three 1/2 payments.

This extra does indeed knock off 7 yrs.



Tom Burris
Mortgage Banker
http://www.servicefirstmckinney.com/
(214) 763-4629 cell/text/nights/weekends(Really!!)
tburris@servicefirstmtg.com
Lending all across the entire Great State of Texas!!
NMLS# 335055
Search Dallas area MLS for FREE. No registration => http://www.ntreisinnovia.net/cgi-ntr/BR_login?0501134
0 votes Thank Flag Link Thu Feb 28, 2013
Make bi-monthly payments and you will pay off your loan in 23 years instead of 30!

Kind regards,
Lara Pavanelli
http://www.larapavanelli.com
0 votes Thank Flag Link Thu Feb 28, 2013
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