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Ways To Save Money On Your Monthly Mortgage Payment
All mortgage loans based on 100,000 at 6.50% fixed for 30 yrs. That's a fairly small mortgage loan in today's world, so realize, the bigger the loan, the more savings in interest there will be! Plug those numbers into my free mortgage calculator and see the details if needed.
You should use an interest calculator to figure out how much money you can save. I'll start off with a simple method of spending NO extra money of your own and saving $400.00 because it's the easiest savings plan there is!
Let's say your monthly mortgage payment is $1000 per month for round figures. If you pay the same amount 4 times a month ($250.00 four times) you'll save .50 per month (more as months go on) = 400.00 for the entire mortgage loan.
That's not doing anything at all! Just pay your monthly mortgage weekly instead of monthly, but don't pay the extra week when there's a 5 week month or you will be paying an extra $250.00 four times a year. This method simply gets the money to the bank faster which means you won't pay interest for as long. It will save you $0.50/month and a total savings of $400.00 on the mortgage loan. There's no reason not to save that money!
Take a look at your calendar and you'll realize if you pay the $250.00 per week instead of $1000.00 per month you will end up making an extra 4 payments of $250.00 per year.
1000 x 12 = $12,000 vs. 250 x 52 weeks = $13,000
By making those few extra principal payments per year you will save $40,000.00! There's big savings available when dissecting your mortgage payment and I'm going to prove it right now for FREE!
You can also pay bi-weekly instead of weekly and it will make an extra 2 payments by the end of the year and save over 40,000.00 on the loan (and it will pay off the loan 6 years earlier). That's figuring for a $1000.00 monthly payment again and paying $500.00 every 2 weeks. This isn't that difficult to come up with because it's only two extra mortgage payment per year of 1000.00 which divides out to about $83.00/month.
Now for some ways to come up with that extra cash to pay down that principal:
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1. Sell a little bit of junk that you have lying around the house once a month.
Even if you manage to scrounge up $20.00 worth, you can put that toward your monthly mortgage and save over 13,000 over the course of the loan. Even a small amount of $10.00 per month will save you over $7,000.00. When all it takes is a simple 10 dollar bill per month to save $7,000.00 you start to really save those pennies!
2. Speaking of pennies, don't forget the oldest trick in the book - Saving your change!
Save it in a jar and come up with another $10.00 per month to save ANOTHER $7,000.00 on your mortgage! Keep your eyes open walking through stores, or down the street for change. Come up with an extra dollar per month and save $745.00 on your mortgage loan! How many ways can you think of to save $1.00 per month to put toward your mortgage?
There's been a lot of numbers and different ways to save money given out so far so here's the easy thing to remember: $10.00/month = $7,000.00 on a $100,000.00 loan over 30 years. However, it doesn't increase that rapidly, every $10.00 isn't "another" $7,000.00. In fact, 100.00 = $45,000.00, so I'll keep throwing out numbers for you to realize how easy it is to save thousands on your mortgage loan.
3. Work ONE extra hour per week doing whatever you can
If you're allowed to work over time at your current job then do that. If not, find something else, such as asking your friend to clean out their basement or garage for an hour or two at 10-15 dollars per hour. If you make $10/hr for 1 hour, once a week, minus taxes you will end up with roughly 7/wk - times 4 weeks = $28.00 per month toward your mortgage and it's a savings of $17,500.00. If you can only manage to work 1 extra hour per month and receive $7.00 it will still save you $5,000.00 on your mortgage!
4. Skip out of half of your morning coffees every month at $1.00 each: $15 per month is a savings of over $10,000.00!! Thinking of any ideas on your own yet?
5. Skip 3 packs of cigarettes per month and add it to your mortgage payment to save money! There's another 10,000.00 in savings!
This list can go on and on! You just need to think of your money differently. Here's an easy way to save money:
6. Every week you buy a gallon of milk at roughly $4.00. Let's say you come across a coupon for $1.00 off a gallon of milk. Chances are you'll skip over it or even throw it away. Well what if the coupon said, "Save $745.00 on that gallon of milk"? It might catch your eye then, right? Here's the math: $1.00 per month toward your mortgage is $745.00 off of your loan. So find a $1.00 coupon once a month and save $745.00 by putting that extra dollar toward your mortgage. Maybe you'll start seeing coupons as hundred dollar bills like I do!
Notice that I haven't told you to cut ALL of the cigarettes or ALL the coffee out of your life because you might not want to. However, the point is that a few little things can add up to a lot when talking about a 30 year mortgage loan.
The main point here is to think of a one dollar bill per month as $745.00. Putting money into your mortgage payment is like a double savings plan. In a 30 year mortgage there is 360 total payments. So if you put $1.00 toward your mortgage every month it would be a total of $360.00. But the savings on interest adds in and you end up saving $745.00! No one cares about putting an extra $1.00 bill into their savings account, but when you see it as a bigger picture you start to realize how important every dollar is. |
