Mortgage Payoff

Three little pigs went to market.

Three little pigs stayed home.

Which were the girls, and

which were the boys

really doesn't matter;

though a clue: girls like to shop.

Each couple had a payoff plan.

One couple liked minimums

stretched out as far as possible.

One couple liked short term,

and paying it off fast.

The other couple?

They paid extra when they could,

and didn't worry when they couldn't.

All were free to choose.

Which system do you use?

And, who had the most fun shopping?

It's a simple mortgage payoff strategy that works when you want to, and it doesn't obligate you any more than you have already obligated yourself. Why not give it a try?

The three couples of the "Six Little Pigs" had three separate plans for paying off their mortgages, and there are many more ways to do it.

This article is a suggestion that follows the way of the "pay extra when you can, and don't worry when you can't" (pay extra, that is) method.

The photos at the right contain some commentary of different homes and different considerations, but what follows is the gist of the "pay extra when you can" approach.

Whether you have mortgage payment coupons you send in with your check each month, or receive monthly (or even biweekly) mortgage statements and billings, each one shows what is paid toward principal, interest, and escrow.

The important figure is the amount that goes toward principal. That is what is paying off the mortgage at a regular monthly amount.

In the months when you can, make an extra payment of that principal amount. By doing so you are reducing the principal balance by an extra month's payment, which also reduces the interest owed on the balance.

Doing that every month, if possible, would mean paying of the principal in less than half the time, while also reducing the total amount of interest paid on the mortgage.

There may be circumstances which could make it impossible, or simply unwise, to make the extra payment for one or more months, but some good will already have been done.

Resume the extra payments when you can, and know that in reality you are paying yourself by every month earlier the mortgage can be paid off.

The interest savings alone will shorten the time needed to pay off the balance of the mortgage.

While personal circumstances could dictate refinancing the mortgage, or investigating a reverse mortgage thoroughly, your regular payments and extra payments can improve your credit rating and make it easier to arrange other special purchases such as a replacement vehicle, solar paneling, and an addition or renovation, etc.

Give this method of payments your consideration, and see if this suggestion makes sense for your mortgage payments.

It just might make a lot of cents and dollars in your pocket.

An Added Note:

Mortgage lenders receive an "annual bonus" whenever a mortgage's escrow account has a shortage at the end of the year. "As a legal courtesy" the lenders will simply roll that shortage into your balance due on the mortgage, and increase your monthly payments accordingly,after also increasing the required escrow for the coming year.

If you just let that shortage add to the balance due on the mortgage, you may find that it equals several months' worth of payments toward the mortgage's principal, actually lengthening the mortgage, and the amount of interest payable on the mortgage.

Be prepared to pay that shortage as soon as possible to avoid those outcomes, and the avoidable increase in the cost of the mortgage.

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© 2017 Demas W. Jasper All rights reserved.

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© 2017 Demas W. Jasper All rights reserved.