Is their a way to pay 30 year mortgage off in 7-12 years?

Asked by Michael Pierre, Oklahoma City, OK Tue Jun 17, 2008

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Frank Diaz, Agent, Honolulu, HI
Tue Jun 17, 2008
You need to ask yourself why you are paying it off early.
Do you have any other debts with a higher interest rate than the home mortgage? If so, pay those first.
Can you deduct the home mortgage interest? How much of a tax advantage does that give by being able to itemize your deductions?
What is the purpose for paying it off early? What is the goal? You need to fit this into your overall financial goals and strategies.
If you plan to keep it forever, maybe. If you are selling in less than 10 years, probably not.
1 vote
Mildred "Mil…, Agent, Green Brook, NJ
Tue Jun 17, 2008
Using microsoft office online download a mortgage amortization schedule template. Input your extra payments and see the difference in years left to pay off the loan. You may want to consult your accountant on this matter.
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Don Tepper, Agent, Burke, VA
Tue Jun 17, 2008
Sure, although it may not be the wisest decision. The simplest way, though somewhat inefficient, is to pay some additional principal each month. On your monthly coupon, there probably is a space for you to pay extra principal. Some people pay a fixed amount (say an extra $100). Others make the equivalent of an additional principal payment each year.

Using one online calculator, with the assumptions of a $500,000 mortgage, 30 years, 6% interest, your principal and interest would be $2,998 a month. Add $200 worth of principal and the payoff occurs in 25 years. Add $600 extra in principal every month, and your mortgage shrinks to 20 years.

There are also a couple of companies out there with somewhat expensive and sophisticated programs that use an equity line of credit in conjunction with your mortgage. You shift money back and forth, taking advantage of the different ways interest is calculated on a HELOC and on a mortgage. Those programs claim a 7-12 year payoff...though that depends on the amount of discretionary income you have that you can put toward the mortgage.

Another option, of course, is to get a 15 year mortgage, rather than a 30 year mortgage. The interest rate will be slightly lower, and your payments somewhat higher. Then it wouldn't take much additional effort to pay it off in 12 years, rather than 15.

However, in many cases it makes more sense for a person to have a mortgage than not to have one. Check with your accountant or financial advisor to determine what's best for you.
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