Extra Payment Helps With Mortgage

You’ve heard the story before; take your mortgage payment, split it in half and pay every two weeks to pay your mortgage down. Great in theory, but the problem is that a lot of mortgage lenders don’t accept partial payments without a fee. And considering that most first mortgages are less than 7% interest, it might be a waste of resources, especially if the homeowner has credit card debt.

The best idea for paying down debt is to pay off credit cards, student loans and the like first. Then, instead of splitting payments for a mortgage, set up automatic payments through the lender with a set additional amount going to principle each month. By adding 1/3 of a monthly payment to each months mortgage debt, you can cut the life of an average loan by eight to 12 years. By sending half again as much as required, you can often cut a mortgage in half. If the thought of automatic payments make you uneasy, send an additional check each month, with the original mortgage payment, with the notation “Principle Payment” in the note field. Cutting down on your mortgage can amount to a large payoff in the years to come.