The key to taking control of your mortgage is an unwaivering determination that you absolutely will repay it in less than 30 years. To do this you must use one or more effective strategies.
The First-Day Payment Strategy
This is one of the most powerful pre-payment tools. It quickly shrinks your loan balance and greatly shortens repayment time.
Paying ahead always works well, but never better than when you make your first payment on the day the lender starts charging you interest.
Every payment you make on the first day dramatically shortens your mortgage in the long run.
The Split-Payment Strategy
Another fast-track to rapid mortgage payoff is to make half payments every fourteen days (every two weeks).
With this plan, by the end of each year you will automatically make one extra payment. Not only that, you also lower your principal balance 26 times a year instead of the standard 12 adjustments.
This simple plan can take years off your mortgage and save you thousands of dollars in interest.
The Specified Principal-Prepayment Strategy
For this method you need an amortization schedule tailor-made to your mortgage.
You must know exactly how much of each payment goes for the previous month's interest and how much is applied to your loan principal the next month.
Here is this plan's secret. Adding next month's principal amount to this month's regular payment automatically cancels one whole payment from your loan!
The Unspecified Principal-Reduction Strategy
This has unlimited flexibility because it has no specified pre-payment amount.
That means you can "overpay" your loan each month by anywhere from one cent (over the regular payment amount) all the way up to the entire unpaid balance. It can be a one-time, monthly, or annual payment—or a combination of these.
You can add periodic bonuses or tax refunds to your regular payment as well. Remember, every extra amount paid shortens the note term and reduces interest cost.
Please Note: You must make extra paydowns for any rapid debt-reduction strategy to work. When you make payments, do not write two checks. Add any extra amount to the check you would normally send.
Excerpt permission granted by Harrison House Publishers
John Avanzini was born in Surinam, South America in 1936. He preaches the message of financial prosperity and teaches that God wants believers to be wealthy. He speaks in conferences and seminars worldwide about biblical economics.
