January 20, 2006

How to PIF the Mortgage ASAP

Lots of the Simplicity books (as well as those folk over at the Daily Reckoning) think renting is better than buying - but if you're already in a mortgage and want to stay there, at least pay it off as fast as you can.

How? You can make an additional payment each year, either lump sum (think bonus time, or refund time) or by paying an extra 1/12th of your monthly payment each month. If your payment is $1000, pay $1083.33 each month ($1000 divided by 12 = $83.33). At year end, you will have paid that extra month's payment. Or, you can calculate an amount to pay against principal, so you can pay the loan off in X years, and you decide the X.

Why? You save a ton of money by cutting off the interest. For details on all this math, go HERE or HERE.

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