This blog is, frankly, more oriented toward your personal life, rather than toward real estate appraisal, per se. So, cut me a little slack here. And yes, The Appraiser Coach coaches in all aspects of life, not just in the professional lives of appraisers.
Since we like to receive payments when we send out invoices, it should follow that those who send us invoices like it when we pay their invoices to us. So, while we must pay our bills, we really like it when the total of our monthly bills is as small as possible. What if we could remove our monthly mortgage payment from the monthly total?
A few years ago, my sister sent me an email to let me know they had paid off their mortgage. That freed up a lot of money every month for her and her family. That made me ask myself how I could take the same step? After some research, I found out a relatively painless process to do just that. Shall I share it with you?
It is amazingly simple. Instead of making 12 mortgage payments per year, make thirteen. What is great about that 13th payment is that, assuming you’ve made all the other 12 payments, 100% of that 13th payment goes toward payment of the outstanding balance of the mortgage (check with your mortgage company to make sure this is true for them). None of it goes to interest. There is no reason to go into the math here, but this step could, literally, cut in half the time it takes to pay your mortgage in full. And, since that extra annual payment goes into the equity in your house, it is a forced savings plan. It is not money-in-the-bank. It is even better in that it is money-in-your-home.
Now, here’s another secret. Are you paying PMI? If you are, and you have paid your loan down to less than 80% of its original value, you can direct your mortgagee to stop collecting this amount since there is no need to pay for this insurance. But wait! Instead of stopping this payment, why not continue paying the same amount to the mortgagee, but direct the cash that once flowed into the PMI premium instead to flow into loan principal reduction? In other words, without paying even one more dime out of your pocket every month than you already were, you are now paying off your mortgage faster than you were before. How does that sound?
Typically, at this point in my blogs, I encourage you to go out and create some value. The same holds true here. But in this case, go out and create some value for yourself and enjoy the fruits of living mortgage-free!
For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: