A mortgage is probably the largest single debt most people will have in their lifetime.
How important is it to be free of this debt as early as possible? Have you actually taken the time to figure out the true cost of your mortgage - the total amount you will have paid before you own your home?
If your mortgage is amortized over 25 years (as most mortgages are), did you know that the largest part of your monthly payment, for at least the first 10 years, is interest? Very little money is paid off against the principal or original debt. Most financial institutions that offer mortgages have flexible payment plans that can save you great amounts of money if you take advantage of them. Here are a few:
- Shorten your amortization period. Not only will you own your home sooner, but this feature significantly lowers the total interest you will be paying.
- Make mortgage payments more frequently; biweekly or weekly instead of monthly. This option makes it possible for your mortgage to be paid down by as much as four to five years earlier.
- Pay additional amounts that will be applied directly against your principal. Monthly or yearly pay downs allow you to pay off your mortgage years earlier, again saving you many dollars in interest.
Which strategy is best for you depends on your personal financial situation and your long-term goals and objectives.
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