Wednesday, April 1, 2009

How To Pay Off Your House In 9 Years

Is it possible to pay off your 30 year mortgage in just 9 years? Of course it is and it is not as hard as you think.  But first, lets see why this is a good idea.

Do you know how much interest you pay on an average 30 year note?  No?  Let me give you an example:

Suppose you buy a house for $220,000 and you get a mortgage for $200,000 for 30 years at 6% interest rate. 

In 30 years you will have paid a total of $431,677.  Ouch!  You paid more than double the price of your house.

Now let’s say you bought the same house and got the same $200,000 mortgage at 6%.   Your monthly payment will be $1199.

How much do you think it will take to pay off that house in 9 years?  Tens of thousands of dollars a month?  How about $5,000 a month more?  Nope.  This is the formula:

Double your monthly mortgage payment and you’ll pay off your house in 9 years.

How much did you save in interest?  Just $172,245!

That’s right.  In this example, sending the bank an additional $1,199 a month will have you house debt free in 9 years.  What’s amazing is this formula works no matter what your mortgage payment amount is.  If you’re only paying $800 month, an additional $800 will do it.

I know, I know, your finances are redlined and you bought more house than you should so you can’t afford to send double the monthly payment.  Ok, how about one third more?

Again, instead of sending in $1,199 on your 30 year $200,000 mortgage you send 1/3 more or $400 more a month.  Now you pay off your house in 16 years and change.  This formula works for any mortgage amount.

Yeah so you really messed up and can only send a tenth or a measly $120 more a month.  Well that gained you a little over 6 years of payments so now you payoff your house in 24 years instead of 30.  Not a big deal right?  Well it still saved you $28,164 in interest over the term of your loan.

So there you have it, send in that extra principle and watch your nest egg grow!

Ps. Check out http://www.mortgageloan.com/calculator/mortgage-payoff-calculator and enter your numbers to see how fast you can pay that mortgage off

 

Is Now a Good Time to Buy?

Time and time again I hear the same question, "Is now a good time to buy Real Estate"

Here's a general principle that can you can use to make profitable deals whether it is Real Estate, stocks or gold coins: Always go against what the masses are doing. 

When everybody is bullish and making money on Real Estate/Stocks you should sell.  When everybody bearish and losing their shirt on Real Estate/Stocks you should buy.

However, that is not what you or your neighbor do is it?  When home prices go down you get scared and do nothing.  You’re afraid to buy because of all the foreclosures around you, homes being sold for half price, and so on.

Yet when houses were being sold in two days and when you had to compete in a bidding war to get any house you had no qualms in buying.

My friend, if you do what everybody else is doing you’re going to get the results everybody else is getting. 

In general, this is the best time to buy real estate since the 80s.  Cash flows on rental properties are at all time highs.  Houses are being sold for pennies on the dollar.  What is stopping you?

Consider also this.  Would you buy a dollar bill for $0.70?  Of course you would, all day long.  So any time you can buy a house worth $100,000 as is for $70,000 it’s a good buy.

Get out there and buy some real estate for pennies on the dollar!