It looks like the wheels are falling off the wagon for our global economy and it’s time to guarantee our return. Making, saving, and enjoying money is our primary focus and investment returns could be tight for the next few years.
Every extra dollar that you put down on your mortgage will save you whatever your mortgage rate is moving forward. If you have a 3.5% 5 year mortgage, you’ll save at least that. Every extra dollar that gets paid towards your mortgage will save you for the rest of your amortization.
Here are some ways to maximize your guaranteed return now that the investment world is rolling over.
1. Make weekly payments towards your mortgage. If you pay $400 a month towards your mortgage vs. $100 a week you will make an extra $400 payment towards your principle each year without even noticing it.
2. ACCELERATE your breath – no mortgage! A simple $20 a week extra on a $200k mortgage at 4% will save you over $15k in interest over a 25 year amortization. That’s better than monthly, semi-monthly, bi-weekly and accelerated bi-weekly. Wowzers.
3. That extra mortgage payment each year will take a 25 year amortization to a 21 year amortization. Saving you four years of payments! Holy crap.
4. If you pay your mortgage off before you retire, you will need to save less for retirement. If your mortgage payment is $1,000 a month you’ll need an extra $240,000 @ 5% return a year, to make that $1,000 x 12 payment in retirement. That’s huge! Pay off your mortgage.
5. Once you have paid off your mortgage you can borrow from it to fund the rest of your life. It’s like an emergency fund that you can eat to get you through your golden years with some proper planning.
Paying off your mortgage makes you feel like a champ! You will be a money maven/mavrick and strut like nobodies business.
Lump sums dumped on your mortgage work the same way. Get a bonus, tax return, or inheritance – dump it on the mortgage. Make more money at work, sell some junk or extra car – dump it on the mortgage. It’s safer and better than the 1.20% high interest rates that the banks have right now.
Check out online mortgage calculators to see how much you can save. Then start strutting.
Have an awesome week,
Dave
