One Last Tip…

Each of the Tips in the last chapter will save you money—from a few dollars to a few thousand dollars. The majority of these methods can be implemented via a simple phone call to your lender. In some cases, you may have to visit your bank or fax a signed request.

By making any of these changes you will start to see the
benefits of saving money immediately.

You may have already figured out what the last Tip is. In case it has not become evident yet, the last Tip is that you combine one, two, or several of these ideas and you will speed up the process of eliminating your mortgage:
• One of the best ways to do this is to pay your fixed mortgage on a Bi-weekly or Weekly basis.
• Paying an extra $25 to $50 on each payment.
• Use a TIPPS program to pay your property taxes on a monthly basis if you live in a large community or city.
• Pay any amount of annual pre-payment that you can afford.
• If it is possible and your budget allows, you should shrink the amortization on your next mortgage by 5 years.
• If you have the double-up option, make sure you budget to do at least one double-up each year. If you can double–up at any time, try to budget for two or three of these payments each year. Double-up payments work the same as a pre-payment feature. Use them to your advantage when you’re able.

Example
Let’s look at our $100,000 (6.00% for 5-year term amortized over 25 years) mortgage one last time to see the benefits of combining these Tips:
• Total Monthly Payment $639.81
• Total Interest paid during 5-year term $28,225.07
• Total Principle paid during 5-year term $10,163.53
• Principle Balance left owing after 5-years $89,836.47

Implementing Multiple Money Saving Methods
Now let’s implement the following to the same example mortgage ($100,000 @ 6.00% for 5-years amortized over 25-years): Bi-weekly payments, and double-up or pre-pay two payments of $639 each year for the first 5 years and we can compare the savings:
• Payments are Bi-weekly @ $319.91
• Every year you pay a total of $1,278.00 towards the principle using your double-up or pre-payment feature.
• You would pay $7,217.21 more in principle

What You Will Save
• You would save $827.21 in interest
• You would reduce the number of payments needed to pay the mortgage by 62 months or $39,629.78 in savings over the whole 25 years term.

That’s only two extra payments per year on a bi-weekly payment schedule and look at how much you can save!