Mortgage payments = net worth
Greenville families today are faced with all sorts of events, expected and unexpected, that discourage building a savings account. College tuition, vacations, medical bills--all contribute to a priority list that does not leave much to build a nest egg. However, those owning a home are building that stability and worth each month when they make their mortgage payments. Most homeowners have the advantage of building up equity and reducing debt at the same time. With each payment, there is an increase in the amount of funds going toward the principle balance and a decrease in the amount paid as interest. If a home is gaining market value as well, equity increases at an even greater rate. This type of forced savings can help families stretch today's dollars into tomorrow's retirement.
To boost your net worth even higher, add a little extra tward your monthly payment whenever possible. One option is to pay half your monthly mortgage every two weeks. On a $100,000, 30 year mortgage at 6.5%, you will save $30,000 in interest. Paying your mortgage every two weeks results in an extra payment every year and this extra payment substantially reduces the length of the loan. Be sure that your lending institution immediately credits the payment upon receipt. If the lender holds the payment until the second half of your payment has been received, you will not see the same benefits.
If you are seriously committed to utilizing a bi-weekly payment plan, but lack the discipline necessary to follow through, check with your mortgage company to see if you can covert your monthly mortgage to a bi-weekly payment plan. A small fee may be involved. If a payment every two weeks is not possible at this time, an extra $75, $50, or even $25 will save you thousands of dollars. Before making additional payments, check with your lender to make sure a pre-payment penalty will not incur.
If you are ready to buy a new home or have plans to sell your home, please contact me. I would love to help you experience both the personal and financial rewards that are associated with owning a Greenville home.
