But what all this means is—I have some debt.
So, whether you’re just starting out, looking to minimize your debt, or you’re an old real estate warhorse like me looking to crunch it down quickly, these tips should help you reach your goals while you maintain or are on your way to financial freedom.
“You can do that?” People often ask me, to which I reply “Why not!” Although some banks and hard money lenders have a per-payment penalty fee if you were to pay extra on the loan, many don’t mind when you pay them extra.
By doing so and accelerating the mortgage debt pay-down, it not only saves you money in interest, it increases your available equity and net worth.
I would see someone send in extra money a month towards principal or use an amortization schedule and send next month’s principal payment with this month’s regularly-scheduled mortgage payment (P+I), and I would see the difference that would make.
Paying one half of the regular monthly mortgage in a biweekly schedule makes the interest $97,215, which is a savings of $30,329 or approximately four years of an earlier payoff.
Normally, people pay their bills out of their checking account while their money sits idle most of the month.
A Look at the Numbers What a sweep account does is it enables the borrower to take advantage of the leverage for themselves.
This is commonly done by utilizing a HELOC (Home Equity Line of Credit) that’s treated like a checking account.
By doing so, you pay your HELOC down over time while you use a HELOC check to prepay your first mortgage thus saving money on a lower interest amount, keeping your money moving as opposed to sitting idle.