NEW YORK (CBSNewYork) — Just because you signed on for a 30-year mortgage does not mean it has to take that long to pay it off.
As CBS2’s Dana Tyler reported, there are painless ways to shave years off your home loan and save a boat load of money.
Bob Idakaar paid off not one, but two mortgages in half the time it should have taken him. He said he did a “happy dance around the house.”
“The amount of money that you will save is amazing!” he said.
And it’s not as difficult as you might think.
“It’s establishing that discipline,” Idakaar said.
Mortgage specialist Barry Habib said one way to go is to get the amortization schedule for your mortgage.
Your amortization schedule is a complete breakdown of your loan, showing the amount of principal and the amount of interest comprised in each payment.
“Take a look at the principal amount of your next mortgage payment. It’s usually pretty small. It could be $100 or $150 – affordable — add that payment to the payment you’re making and you will literally skip the next month’s payment,” he said.
That extra $100 or so a month could actually cut a decade or more off your payment schedule…
“Another way to do it — look at what the difference would be in payment to a 20-year,” Habib said.
You can calculate the difference and make the 20-year monthly payment instead of the 30-year, according to Habib.
“The difference is less than what most people think and saving those 10 years is great,” he said.
“You’d be saving $72,000,” Idakaar added.
Idakaar, a real estate agent in Morristown, says his approach was to simply make one extra payment a year.
“One extra payment a year in the scheme of things will save you over $127,000,” he said. “That’s 67 payments that you will not make.”
Another way to do that is to switch to bi-weekly payments.
“When you get that piece of paper that you’re just paying taxes now, your lien is satisfied,” Idakaar said. “That’s a great feeling.”
Committing any windfalls like a tax refund toward your mortgage’s principal is also a great way to pay of your mortgage faster.
About 30 percent of Americans own their home free and clear.