Cost cutting has become
something of an art form for those who are serious about saving money. One
potential area for saving that most people fail to consider is their mortgage.
You can shave years off your mortgage and save thousands of dollars in interest
by adding a little extra to your mortgage payment each month.
Suppose you took out a 30-year mortgage for
$125,000 at 8% interest with a monthly payments of $917. Your total payments
over the life of the loan will come to $330,194, and $205,194 of that amount
will be interest. If you pay just $100 extra each month, your total loan
payments will be $265,050. You will save $65,144 in interest and retire your
mortgage in 19 years!
Is it in your best interest to pay off your
mortgage early? It depends. Your decision should be based on your budget, your
long-range plans (how long you plan to live in your home), and your income
bracket. Consult your tax accountant to find out if an early payoff is an option
for you.
