The Blue Water Mortgage Blueprint to Paying Off Your Mortgage Early Roger Odoardi It’s every homeowners dream to pay off their mortgage and free themselves from the financial obligation of owning a home. For most homeowners, however, this dream doesn’t become a reality until the culmination of their mortgage terms—which depending upon what they’ve worked out could be 15, 20 or even 30 years. But, what if there was a way to shave years off your mortgage without having to empty your bank account each and every month? What if there was a systematic approach any homeowner could take to pay off their mortgage and not dramatically alter the life they’ve become used to living? With over 150 years of collective mortgage experience, Blue Water Mortgage has developed an effective strategy that helps any type of homeowner (from first-timers to veteran homeowners) start paying off their mortgage faster. The following strategies are proven winners—as long as you’re willing to make a few sacrifices month-to-month or year-to-year. 1. The Little by Little Approach Adding a little extra to your principal payment each month is a tried and true strategy to pay off your mortgage in a faster manner. This strategy is great for first time homebuyers that are in the infancy of the home owning experience. It’s also proven to be an effective strategy veteran homeowners use as well. First time homeowners may find it difficult at first to budget additional money on top of their mortgage payment. Luckily, there are two effective ways to add to each monthly mortgage payment to make a dent. Round Up: Begin rounding up your payment each month. (Round up your $1,430.58 payment to $1,440.00 or even $1,450.00) This is a good first step in getting used to paying a little more and can usually be accomplished immediately upon buying a new home. While it may not seem like much, it will add up and you’ll notice the benefits. Ditch Dinner Out: Consider adding $25, $50, or even $100 to your monthly payments. If you think about it, $25-$100 extra applied to your mortgage represents the equivalent of skipping dinner or a few lunches out once a month. Consider skipping that ice mocha latte each and every morning and pocketing that money for your mortgage payment. Use Blue Water’s extra payment calculator to determine just how much it will take to shorten the life of your loan. If you do decide to pay extra each month, make sure the extra is applied to the principal balance and not for the next month’s payment. Also, make sure there are no pre-payment penalties interwoven into your mortgage terms. 2. The Lump Sum Approach Rather than squirrel away money each and every month, why not take some big bites out of the apple throughout the course of a year instead? Not everyone is able to save money in the same fashion, so this approach serves as a suitable alternative to the Little by Littler strategy mentioned earlier. A first time homeowner may find this harder to achieve compared to a veteran homeowner who may be a bit more established financially. Either way, taking a lump sum approach typically involves the following: Budget Your Bonus(es): Applying any or all of a holiday or performance-based bonus is a very effective way of paying down your mortgage in a quicker fashion. Think about it. This money is technically extra, and in some cases could come as a surprise, so why not invest it into your race toward financial freedom. An Extra Monthly Payment: While the calendar suggests there are only 12 months in a year, that doesn’t mean you only have to make 12 payments throughout the year. Making an additional monthly payment each and every year can certainly add up over time and is another highly effective way of paying down your mortgage in a faster fashion. Applying more money to your mortgage payments isn’t the only proven way of paying off a home mortgage loan earlier than expected. There’s also a simple housekeeping approach a homeowner can do to the terms of their mortgage that can help reduce the years of monthly mortgage payments. 3. Refinance Length of Mortgage Terms Changing your mortgage from a 30-year to a 10-, 15-, or even 20-year is a surefire way of reducing the length at which you’ll be paying off the loan. Expect your payments to rise month to month, but it will be worth it when you’re mortgage free 5, 7, even 10 years earlier. This approach is similar to the earlier ideas of adding additional payments month to month, however it solidifies those extra payments and eliminates any choice of making the additional payments. Some people will react to this method better than others. Homeownership, while some consider a financial burden, is actually an incredibly smart investment strategy. Blue Water’s team of loan officers has an extensive amount of experience working with homeowners who are looking for innovative ways to pay down their mortgage in a fast and efficient manner. Contact us today to talk about finding ways that work for you. Roger Odoardi Roger is an owner and licensed Loan Officer at Blue Water Mortgage. He graduated from the University of New Hampshire’s Whittemore School of Business and has been a leader in the mortgage industry for over 20 years. Roger has personally originated over 2500 residential loans and is considered to be in the top 1% of NH Loan Officers by leading national lender United Wholesale Mortgage.