7 Easy Ways to Pay Off Your Mortgage Early – From Dave Ramsey

7 Easy Ways to Pay Off Your Mortgage Early – From Dave Ramsey

Want To Get Ahead In Life?...

One of the biggest drivers for me pursuing a career in real estate has been the idea that I could help people map out how to stop paying rent, and how to buy financially smart properties. While Dave Ramsey rubs me the wrong way on a personal level sometimes (I’m sure we’d get along pretty well) I think he’s helped an enormous number of people change their lives, and the lives of their families for generations. So whether you are thinking about buying a house, or you just want to pay down the house that you already own there is no better day to start planning than today.

Grady

7 Easy Ways to Pay Off Your Mortgage Early

According to the Urban Institute, more than 26.9 million Americans own their home outright.(1) Some bought their homes with cash, while others whittled away at their mortgages year after year until they were gone.

Maybe you worked with a great real estate agent and got a deal on your home, but—like two-thirds of American homeowners—you had to take out a mortgage to finance the purchase.(2) You can join the ranks of debt-free homeowners and make your last mortgage payment sooner rather than later with these seven easy ways to pay off your mortgage early!

Can I Pay Off My Mortgage Early?

Each time you pay extra on your mortgage, more of each payment after that is applied to your principal balance. But, before you start making extra payments, let’s go over the ground rules.

  • Check with your mortgage company first. Some companies only accept extra payments at specific times or may charge prepayment penalties.
  • Include a note on your extra payment that you want it applied to the principal balance—not to the following month’s payment.
  • Don’t shell out your hard-earned cash for a fancy-schmancy mortgage accelerator program. You can accomplish the same goal all by yourself. High-five!

If you want to get serious about paying off your mortgage quickly, check out our mortgage payoff calculator. It will help you estimate how quickly you can pay off your home.

Biweekly Mortgage Payments

The concept of a biweekly mortgage payment is pretty simple. You make half of your mortgage payment every two weeks. That results in 26 half-payments, which equals 13 full monthly payments each year.

That extra payment can knock eight years off a 30-year mortgage, depending on the loan’s interest rate.

How to Set Up a Biweekly Mortgage Payment

  • Locate the principal and interest portion of your payment on your monthly statement and simply divide that number by two. For example, if the principal and interest portion of your payment is $1,500, your new biweekly mortgage payment is $750.
  • Don’t forget to include the tax and insurance portion of your payment each month. In this $1,500 payment example, the $750 biweekly payment only covers principal and interest. You’ll have to pay the tax and insurance portion of your payment in addition to that.
  • Find out how or if your mortgage company handles biweekly mortgage payments. Some lenders will process biweekly payments while others refuse to accept partial payments at all. In any case, do not pay a fee to initiate a biweekly mortgage plan.
  • If your lender isn’t open to biweekly payments, open a new bank account exclusively for your mortgage payment. Deposit your half-payment every two weeks and use that money to make your full mortgage payment (either by check or automatic payment) on every second deposit.
  • A biweekly payment is not a substitute for gazelle intensity. Once you reach Baby Step 5, start putting as much money as you can toward the mortgage to pay it off even faster.

How to Pay Off Your Mortgage Early

Every dollar you add to your regular payment each month puts a bigger dent in your principal balance—and you don’t have to double-down to make a difference. Adding just one extra payment each year knocks years off your mortgage!

Here are some other options for paying extra on your mortgage and how those extra payments affect, as an example, a $220,000, 30-year mortgage with a 4% interest rate:

1. Make an Extra House Payment Each Quarter

You’ll pay your mortgage off 11 years early, and you’ll save more than $65,000 in interest.

2. Bring your Lunch into Work

Toting a brown bag to work every day won’t win you any fashion contests. But trading lunch out for eating in can make you a lean-and-mean, mortgage-free machine three years ahead of schedule. Applying your $100 a month in lunch money to your mortgage will also save you more than $28,000 in interest.

Other small sacrifices can go a long way to help pay off your mortgage early. Put Andrew Jackson to work for you by adding just $20 to your mortgage payment each month. Based on our example mortgage numbers above, you’ll pay your mortgage off a year early, saving over $7,000 in the process.

How much could you save if you took your Starbucks money and added it to your mortgage payment each month? According to the Acorns Money Matters Report, the average American spends $3 per day on their coffee.(3) That’s around $90 a month added to your mortgage payments—which will save you $25,000 in interest and four years on the life of your loan!

3. Refinance—Or Pretend You Did

The only type of debt Dave won’t yell at you about is a 15-year fixed-rate mortgage with a payment that’s no more than 25% of your take-home pay. You’ll pay much more in interest on a 30-year mortgage—and, besides, who wants to be in debt for 30 years?

You can refinance a longer-term mortgage into a 15-year loan. Or, if you already have a low interest rate, save on the closing costs of a refinance and simply pay on your 30-year mortgage like it’s a 15-year mortgage. The same goes for a 15-year mortgage. If you can swing it, why not increase your payments to pay it off in 10 years?

If you have questions about refinancing or need help with a mortgage, we recommend you contact Churchill Mortgage.

4. Downsize

Downsizing your house could be a drastic step, but if you’re set on getting rid of your mortgage, consider selling your larger home and using the profits to buy a smaller, less expensive home.

With the profits from selling your bigger house, you may be able to completely pay cash for your new home. But even if you have to get a small mortgage, you’ve succeeded in reducing your debt. Now your goal is to get rid of that debt as quickly as possible. The smaller the balance, the quicker you can make it happen.

We all know hindsight is 20/20, but if you take advantage of the following tipsbefore you purchase your next home, you will be in a great position to pay that mortgage off early.

5. Don’t Bite Off More Than You Can Chew

Before you search for homes or find a real estate agent, it’s important to ensure you’re financially ready and can actually afford the house you want to buy. This handy checklist is a great place to start. If you can’t say yes to all six questions, it’s best to put your home purchase on hold.

  • Am I debt-free with three to six months of expenses in an emergency fund?
  • Can I make at least a 10% (preferably a 20%) down payment?
  • Do I have enough cash to cover closing costs and moving expenses?
  • Is the house payment 25% or less of my monthly take-home pay?
  • Can I afford to take out a 15-year fixed-rate loan?
  • Can I afford ongoing maintenance and utilities for this home?
  • If you need help figuring out how much house you can afford, our free mortgage calculator is a great place to get more information and see how much your maximum payment should be.

6. Consult a Pro to Find the Right Home

If you’re looking to buy a home that fits your budget, or if you’re ready to sell your home, consult an experienced real estate agent whose advice will save you time and money.

A buyer’s agent can help you navigate through the home-buying process. In some cases, they may even be able to help you find a house before it hits the market, giving you a competitive edge. And when it comes to making an offer, your agent will negotiate on your behalf—so that you don’t pay a penny more than you have to.

You can find a trustworthy real estate professional in your area through Dave’s nationwide Endorsed Local Provider (ELP) network. Our ELPs understand how important it is to you to buy a home you can afford, so you can trust that your ELP won’t pressure you to consider homes that would bust your budget. Contact your agent today!

7. Maximize Your Down Payment

The best way to buy a home is with 100% down. Paying cash for a home may sound weird, but imagine all the fun you could have without a mortgage payment weighing you down!

If you can’t postpone the purchase until you can pay cash, plan to put at least 10% down at the closing table. Of course, 20% is even better because then you’ll avoid paying private mortgage insurance (PMI). PMI typically costs between 0.5% and 1% of the loan amount annually. For example, on a $250,000 mortgage, PMI will cost you $1,250 to $2,500 a year.(4) Why give the bank extra money each month if it doesn’t pay your mortgage down faster?

Keep in mind that the more cash you put down on the front end, the less money you’ll need to finance. That adds up to a lower mortgage payment each month, making it easier to pay off your mortgage early.

Related: Want to learn more about how to save up a down payment on a house—and fast? Our 5-Day Home Buyer Savings Plan will help you discover simple tricks to save a five-figure down payment by this time next year.

Chris Hogan is the #1 national best-selling author of Retire Inspired: It’s Not an Age. It’s a Financial Number and host of the Retire Inspired Podcast. A popular and dynamic speaker on the topics of personal finance, retirement and leadership, Hogan helps people across the country develop successful strategies to manage their money in both their personal lives and businesses. You can follow Hogan on Twitter and Instagram at @ChrisHogan360 and online at chrishogan360.com or facebook.com/chrishogan360.

The Sting of Higher Rates – Steve Rattner

The Sting of Higher Rates – Steve Rattner

I fear that this might initially seem like a topic that is not interesting enough to hold many people’s ever shrinking attention spans, but there are a few principles that can be helpful for someone who is thinking about buying real estate with a loan related to the coming rise in interest rates. When the Federal Reserve keeps rates low (as they have for the last decade, to spur on economic growth/recovery) people tend to borrow more money, because it’s cheaper to borrow. Since people are able to borrow more they often find that prices rise faster because there are more people with more money burning a hole in their pocket. If you’ve been tracking real estate you will have surely noticed in most markets that prices have risen quite a bit over the last decade. And with people moving back into urban centers those prices have jumped more – while some rural markets have lagged behind.

So, maybe you are thinking about buying something sometime soon and you’re possibly afraid of overpaying, and/or having a rate that is higher than you want it to be? The historic average in recent decades on a mortgage interest rate is about 7%. So rates going over 5% is still relatively low. However, people are borrowing more money for homes that are larger (although that is trending down, particularly in urban areas), so people are still needing to figure out the balance of their own personal priorities. Coming up with a game plan can be somewhat complicated, but certain aspects of the search don’t have to be. Don’t be afraid to tell someone that you don’t know something, and ask for advice. Call your Realtor, and your lender to see what your options are if you think you might want to buy property. Making a plan is really in your best interest. This article might sound doom and gloom, but it doesn’t have to be entirely. Rates will rise, and things will change – so make a plan. Now go find a way to enjoy this day, and I hope you enjoy this article.

-Grady

The Sting of Higher Rates – Steve Rattner

On MSNBC’s Morning Joe today, Steven Rattner discussed the implications of rising interest rates on would-be homeowners, the stock market, and federal borrowing. Interest rates are on the rise, causing pain for Americans seeking mortgages and contributing significantly to the recent swoon in the stock market. Over the past year, the average rate on new 30 year mortgages has risen by a full percentage point, from just over 4% to just over 5%. That puts the cost of a new mortgage at the highest rate since early 2011. The increase has been largely driven by a similar rise in rates on US Treasuries. As a result, the housing market has already begun to soften. Existing home sales have fallen 6.6% from November 2017 and the sales of new homes have fallen even faster, by 11.6%. New housing starts and homebuilder sentiment has similarly declined. Interest rates normally rise later in the recovery cycle but the recent increase has been unusually fast and is due, at least in part, to rising federal borrowing. In the past 12 months, the government borrowed just over $1 trillion of new funds, almost exactly double what it borrowed in the preceding 12 months. And that high level is projected to remain indefinitely. On top of that, the average interest rate that the government pays has risen substantially, from just over 2% during the previous several years to almost 2.4% at present. As a result of these two factors, the government’s interest costs have begun to rise and are projected to increase more steeply. While the government deficit has been rising, its interest expense has remained relatively stable (until now) because rates were low. But now, interest expense will become a bigger cost for the government than Medicaid in 2020 and by 2023, interest expense is projected to be higher than the entire cost of our military budget. (Fun fact: our federal interest expense is now larger than the entire GDP of Belgium.)

Steve Rattner is the Chairman and CEO of Willett Advisors LLC, which invests former New York Mayor Michael Bloomberg’s personal and philanthropic assets. He is the Economic Analyst for MSNBC’s Morning Joe and is a Contributing Writer for the Op-Ed page of The New York Times.

Metro Brokers of OK Sold the Most Real Estate in Norman in 2017 | Norman Transcript

Metro Brokers of OK Sold the Most Real Estate in Norman in 2017 | Norman Transcript

When I was growing up I was one of those kids whose aptitude run parallel to my grades in the classroom. I was clearly the best in my class at math for many years, but I was also in a class for kids who weren’t great at reading – which I found humiliating/confusing. I couldn’t figure out if I was a smart kid or a dumb kid. I just wanted clarity actually, because not knowing which one I was constantly plagued my identity. I finally got out of the reading class in 3rd grade, but I still questioned my intelligence. I did however find that whenever I had a teacher who gave me more space to learn how I needed to I felt enormously more capable and, I would regularly lead in class rather than distract. Even when I did testing in college for ADD they found that I had a high level of intelligence, but I had trouble functioning within the established structures of a classroom. They found that I struggled in class not because I had ADD, but because I was anxious due to not functioning well in the established/traditional way that I was “supposed to”.

Fast forward about 20 years and I am still that same little kid. I know my limits and capacities better than I did 20 years ago, but I’m still challenged daily by not feeling like I fit in a simple box. Luckily I found a company 4 years ago that gave me exactly what I needed: flexibility, and a big green light! People doubted that changing some of the traditional paradigms in real estate would work, but I’m very proud to be a part of my company. I don’t want to take away from any other company (I’m so proud of the community that our industry has), but there is a reason why our company has grown faster than any other company, and sold more houses in Norman than any other company the last few years. Go team! Below is an article from the Norman Transcript about our success do to challenging norms. Thank you to the 7 founders of the company who took a big risk, it paid off.

Grady

Not Your Average Real Estate Broker | Norman Transcript

Metro Brokers of Oklahoma was founded a decade ago by a group of realtors who wanted to bring a different set of values to real estate.

Apparently, their vision to combine broker autonomy with high ethical standards has paid off. According to a ranking report of 2017 calendar year numbers, Metro Brokers was the leading agency for total transactions in Norman.

With 14.33 percent of the Norman market share, 247 listings, 294.5 sales and a total of 541.5 total transactions, they are ahead of the leading and more traditional Norman real estate companies.

“We opened Aug. 1, 2007, so we’re going into our eleventh year,” said Gwen Arveson, owner and principal broker. “We have offices all over the metro with 189 agents and 35 branch offices.”

Arveson and Betty Goss, owner-manager and branch broker, believe the supportive yet independent culture of their workplace is at least partially responsible for their success.

“We are not a traditional real estate company,” Goss said. “We believe in allowing our associates to run their own business with integrity, and we support them. We don’t have production requirements.”

In 2017, Metro Brokers of Oklahoma ranked fourth in the Oklahoma City metro for total transactions, but that’s not a market Arveson, Goss or their fellow co-owners had planned to enter initially.

Goss and Arveson were friends with each other and the other Metro Brokers owners when they decided to form the company.

“We were all selling real estate, and we decided we wanted to structure a company that was different than any company in Norman,” Arveson said. “We did that all the way from writing our vision statement to writing our culture statement of the type of people we wanted to attract.”

The business started in Norman and organically spread to the metro.

“We were not prepared to do the branch office thing,” Arveson said. “There were just seven of us who wanted to sell real estate. We have never recruited anyone. People came to us. Another thing that makes us different from other real estate companies is that we allow our branches to work with total autonomy within the law.”

Goss is a long-time Norman resident who got into real estate so she could avoid an office job.

“My best friend said I was good with people and should try real estate, and I did and I love it,” she said.

Arveson and Goss say Metro Brokers nurtures self-motivated realtors rather than promoting competition. The company doesn’t recognize the top producer of the month, but it does provide support through office facilities, insurance coverage, a website, brand awareness, training and collaboration among members who are more willing to help because they’re not in competition.

“We do interviews,” said Arveson. “Before anyone can join us, they have to come to a 30 minute interview that two of the owners conduct.”

The focus of those interviews includes ethics and values.

“When we’re interviewing, we listen to their background story,” Goss said. “We listen to keywords to how they handle their previous work. Above all, we look for integrity with how they are going to treat their counterparts, owners and the public with respect to how they do business.”

Metro Brokers does not charge extra fees to brokers — there are no desk fees, technology fees or franchise fees, and the annual membership fee never increases, it is locked in for life.

“The company was started by all Oklahoma people, and we are not a franchise so the money stays in Oklahoma,” Arveson said. “We offer full service real estate. We allow the branch offices to fully run their offices however they want. We don’t interfere with their finances.”

Arveson started in real estate in 1986. Working with like-minded realtors to create a business comprised of a “professional but non-restrictive membership group” to support each other in running a “fair and profitable real estate business,” was the culmination of a dream come true and the fruition of the values she and the other owners hold dear.

“We start every meeting with prayer,” Arveson said. “All of the owners are Christians. That doesn’t mean you have to be a Christian to work here, it just means you have to respect what we do.”

Brokers determine their own goals, commission fees, income and expenses.

“We teach them to compete with themselves,” Arveson said. “We want them to work together rather than being competitive. The real estate business is already competitive enough.”

That approach is paying off in more than just sales numbers.

“We have more associates than anyone in Norman,” Goss said. “People who do business with us are pleased with our reputation as experienced realtors who do the right thing.”

Source: Not your average real estate broker | Local News | normantranscript.com

Tax Tips For Homeowners That Could Help Reduce Tax Bills

Tax Tips For Homeowners That Could Help Reduce Tax Bills

Taxes… There are but a few exercises that help people recall their anger and anxieties better than thinking about their taxes. I personally am a believer in a civil society, and I don’t find it helpful for anyone to complain so much about paying taxes. However, it does hurt each year when I have to pull out my checkbook to pay the remainder of my bill. The last few years I’ve done myself a favor and gotten them done early, and it’s a big weight off of the old shoulders honestly. Maybe it’s a good time to go ahead and start figuring out your taxes, and if you’ve bought a home recently here is a list of things you’ll want to remember. Keep in mind that this was produced by Credit Karma and you should look into any services  that may be advertised or suggested before using them.

-Grady

Tax tips for homeowners

Young couple using a tablet to review their finances in their new home.

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Owning a home gives you access to special tax breaks, and taking advantage of them could help you at tax time.

“Many homeowners miss out on a lot of deductions every year because they aren’t aware of all the savings opportunities available to them,” says Josh Zimmelman, president of Westwood Tax and Consulting.

These seven tax tips could help you make the most of the many tax breaks for homeowners and maximize any income tax refund you may be owed.

1. Stay organized

Many of the tax deductions or credits you can take as a homeowner require you to keep detailed records of your home-related expenses. Start saving receipts and other information right away; don’t wait for tax time to roll around.

“If you take a few minutes to set up an organization system for your tax paperwork and financial records, it should be quick and easy to maintain,” Zimmelman says.

One way is to keep hard copies of all your financial documents and receipts. Or, you can scan and store your documents digitally. Apps like HomeZada can help you stay organized for a small fee.

2. Itemize your deductions

For the 2017 tax year, the standard deduction is $12,700 if you’re married filing jointly, $6,350 if you’re single or married filing separately, and $9,350 if you’re filing as head of household.

As a homeowner, though, you may have enough in eligible expenses to itemize your deductions. If those itemized deductions add up to more than the standard deduction, you could lower your tax bill even more.

Eligible expenses could include:

  • Home mortgage interest
  • Property taxes
  • Charitable contributions
  • State and local income taxes or sales tax (but not both)
  • Loss from property damage or theft
  • Some medical expenses not paid for by insurance
  • Work-related expenses your employer didn’t reimburse you for

3. Keep track of your moving expenses

Taking advantage of the moving expenses deduction can be a valuable tax tip for homeowners. If you moved into your home this year because of a work relocation, you might be able to deduct some of your moving expenses and some of the closing costs on your home.

To qualify for the moving expense deduction, you have to meet certain requirements. For example, your new workplace must be at least 50 miles farther from your old home than your old workplace was. Also, the move must occur within one year of starting the new job.

“Deductible [moving] expenses might include money spent on travel, moving trucks and storage units,” Zimmelman says.

As for closing costs, you can deduct some or all of the discount “points” you paid to lower the interest rate on the loan.

File your taxes with Credit Karma Tax

Prepare and file your federal and state income taxes for free. And if you’re owed a refund, we’ll make sure you get the max back.

4. Hold onto home improvement receipts

If you make any improvements to your home, the expenses aren’t deductible for the current tax year. However, when you sell the home in the future, they can help lower your tax burden then.

That’s because you can add home improvements expenses to your adjusted basis, which is generally what you paid to buy the house, plus the cost of construction, renovation, or other improvements you’ve made, minus any losses you’ve experienced from damage to the home.

For the tax year in which you sell the home, your taxes on the sale are based on the sale price plus any concessions you get from the seller (such as them paying closing costs) minus your selling expenses. If the amount you gain from that equation is higher than your adjusted basis you have a capital gain on the sale. So, the higher your adjusted basis, the less taxes you may have to pay on your profit from the sale.

5. Track your home office expenses

If you work from home, you may be able to deduct some of the expenses you incur for your business use of your home.

“Not every person who works from home can claim a home office,” Zimmelman says. “The home office must be used regularly and exclusively for business and be the primary site of the business.”

Types of expenses you can deduct include the actual expenses you incur for the home office and depreciation for the portion of the home used.

You may even be able to qualify for this deduction if you’re an employee. You have to meet additional requirements, however. For example, your remote work situation must be for your employer’s convenience. So, if you’re working from home just because it’s an option, you might not qualify for the deduction. If, on the other hand, the employer has no home office and you have no choice, you could be eligible.

6. Make energy-efficient updates

Adding a solar energy system to your home is not only good for the environment, it can also be good for your tax refund. The IRS allows you to take a tax credit worth 30 percent of the cost of installing a solar energy system.

If you’re thinking about holding off on taking advantage of this tax credit, don’t wait too long. The credit amount for residential improvements decreases to 26 percent in the year 2020, then to 22 percent in 2021, after which it goes away entirely.

7. Save your tax records

Here’s one tax tip for homeowners that’s probably valuable for most people. Once you take advantage of all the available deductions and credits in the current tax year, hold onto them.

“You never know when you might get audited,” Zimmelman says. “It’s important to have the documentation to back up your deductions.”

The law requires that you keep all the records you use to file your tax returns for three years from the date a return was filed. That’s typically how far the IRS goes back when doing an audit. Keep in mind, however, that the IRS can go back further (usually no more than six years back) if it identifies a substantial error in a return.

Bottom line

Owning a home can be expensive, but, fortunately, the tax breaks can help make up for the extra costs. As a homeowner, it’s critical to know which deductions and credits you qualify for and to make sure you maximize them to your benefit. Using Credit Karma Tax™ to file your taxes for free, and following these tax tips for homeowners could help.


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Source: Tax tips for homeowners could help reduce tax bills ⎸Credit Karma

4 Ways To Pay Off Your Mortgage Early

4 Ways To Pay Off Your Mortgage Early

Understanding the power of compounding interest can truly change your life. You’ve probably heard people describe money as a snowball – meaning it’s either shrinking or growing at an exponential rate. Well that simple concept should give motivation for people to aim to pay off their mortgages early if they can. If you’d like to see what I’m talking about Click Here to play with a mortgage calculator and study how much money you might save in interest if you pay a little extra each month. Or study below one of the other 3 paths. There’s never a better time than now to make a positive change in your life.

-Grady

4 ways to pay off your mortgage early

If you can afford it, it might be simple to pay off your mortgage early. But should you? That’s a complicated question.

Homeowners with low mortgage rates may be better off putting extra money in a Roth IRA or 401(k), both of which might offer a higher return than paying off the mortgage.

Then there’s the college aid factor. If you’re applying for need-based aid for your kids, that home equity could count against you with some colleges because some institutions view equity as money in the bank.

If, after those caveats, you want to pay off your mortgage early, here are four ways to make it happen.

  • Refinance with a shorter-term mortgage
  • Pay a little more each month
  • Make an extra mortgage payment every year
  • Throw ‘found’ money at the mortgage

Should You Pay Off Your Mortgage Before You Retire?

There are many misconceptions about mortgages and retirement. Greg McBride breaks down the facts.

1. Refinance with a shorter-term mortgage

You can pay off the mortgage in another 15 years by refinancing into a 15-year mortgage.

Let’s say you got a 30-year fixed-rate mortgage for $200,000 at 4.5 percent. Then, five years later, you can refinance into a 15-year loan at 4 percent. Doing so pays off the mortgage 10 years earlier and saves more than $60,000 (if you exclude closing costs on the refi).

Those shorter-term mortgages often carry interest rates a quarter of a percentage point to three-quarters of a percentage point lower than their 30-year counterparts.

Refinancing isn’t quick or free. It requires filling out the application, providing documentation and having an appraiser visit. There are closing costs.

And even with a lower interest rate, that quicker payoff means higher monthly payments. And this method is a lot less flexible. If you decide that you don’t have the extra money one month to put toward the mortgage, you’re locked in anyway.

Unless the new interest rate is lower than the old rate, there’s no point in refinancing. Without a lower rate, you’ll get all the same benefits (and none of the extra costs) by just increasing your payment a sufficient amount.

2. Pay a little more each month

Divide your monthly principal and interest by 12 and add that amount to your monthly payment for a year. Result: You make the equivalent of 13 payments in 12 months.

Let’s say you got a $200,000 mortgage at 4.5 percent. After five years of making the minimum payments, you add an extra 1/12 of a month’s principal and interest to each monthly payment. Doing so pays off the mortgage three years and three months earlier and saves more than $18,000 interest.

Before you make anything beyond the regular payment, call your mortgage servicer and find out exactly what you need to do so that your extra payments will be correctly applied to your loan.

Let them know you want to pay “more aggressively” and ask the best ways to do that.

Some servicers may require a note with the extra money or directions on the notation line of the check.

In any event, if you’re putting extra money toward your loan, always check the next statement to make sure it’s been properly applied.

3. Make an extra mortgage payment every year

Instead of paying a little more each month, make one extra monthly payment each year. One way to do this is to save 1/12 of a payment every month, and then make an extra payment after every 12 months. This gives you the flexibility to use the extra savings for something else if a more pressing expense arises.

Let’s say you do this starting the first month after getting a 30-year mortgage for $200,000 at 4.5 percent. That would save more than $27,000 interest, and you would pay off the mortgage four years and three months earlier.

4. Throw ‘found’ money at the mortgage

Get a bonus? A tax refund? An unexpected windfall? However it ends up in your hands, you can funnel some or all of your newfound money toward your mortgage.

Let’s say you got a 30-year, fixed-rate mortgage for $200,000 at 4.5 percent. Then, five years later, you can make an extra $10,000 lump-sum payment. Doing so pays off the mortgage two years and four months earlier, and saves more than $19,000 in interest.

The upside: You’re paying extra only when you’re flush. And those additional payments toward the principal will cut the total interest on your loan.

The downside: It’s irregular, so it’s hard to predict the mortgage payoff date. If you throw too much at the mortgage, you won’t have money for other needs.

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Source: Pay Off Mortgage Early: 4 Ways To Do It

Planner Shares System For Managing Money – Business Insider

Planner Shares System For Managing Money – Business Insider

Being a real estate agent is often a lot like being a party planner. There are several people and issues that need to be kept up with, and consistently held to account. Part of making sure that the party goes off without a hitch when working with a homebuyer is making sure that they have a financial plan to execute the purchase. Most people like to keep their finances rather private, so it’s important that people know that making that plan can be done in private. I often recommend that people use a few different free services to monitor their finances and credit: Mint.com, and Credit Karma. They both run ads, but if you can just ignore those you can be a step ahead. Feel free to send me a message if you have any questions about either one of those services. Now, read this article and if you don’t have these basic financial tools in place start setting them up. You can do it – now let’s make a plan and throw that party!

If you are seriously wanting to get your financial house in order you might reach out to an accountant/cpa and maybe even a financial planner to look at how you can use your money to best fit you life and goals. And you might also talk to an estate planner in case you are worried about what will happen to your assets in the case of you passing away. My sister Claire is actually an estate planner and you are more than welcome to call her to ask about what that looks like, just tell her that I sent you. 🙂

Claire Bailey,  Bailey and Poarch: (405) 329-6600

Grady Carter
Realtor®, GRI
Metro Brokers of Oklahoma
Lic. #160723

 

“A few years ago, I put in place a ‘Money Flow’ system to help my family track our spending.”

A Financial Planner Shares Her Personal System For Managing Money

family walking beach winter

The author’s family is not pictured.Flickr / James Brown

Part of the reason we accumulate debt is that there are so many distractions in our lives – things we want to buy but don’t need.

But we also ring up debt because we simply don’t understand the flow of our income and expenses, so we can’t accurately estimate how much money we have available to spend.

I’ve struggled with this myself. A few years ago, I put in place a “Money Flow” system to help my family track our spending.

You may have heard of a system like this before, but follow along on this tour, because it really works.

Putting the pieces in place

1. Set up two free checking accounts:

  • One to pay fixed expenses (such as the mortgage, car payments and utility bills).
  • One to pay variable expenses (groceries, gas, clothing and so on).

2. Set up a high-yield online savings account.

We call this our “curveball” account. It’s an emergency fund for use when life throws us curveballs – large medical bills, a job loss or reduction in income, major home repairs, that kind of thing.

3. Make a plan for big-ticket items.

My husband and I agreed that we would use one family credit card for large purchases, such as airline tickets and hotel stays. We still have our separate credit cards – it’s wise to keep your own credit cards to maintain your credit score and credit history. Using them once or twice a year should be sufficient. And don’t close those cards because it will affect your overall credit score.

Implementing the system

1. Draw up a budget for fixed and variable expenses.

Add up how much you need in each category. This will be your guideline for how much should be in each of your checking accounts.

Fixed expenses might include:

  • Rent or mortgage payment
  • Property taxes
  • Utilities (gas, electric, water, etc.)
  • Home, auto and umbrella insurance
  • Life, disability and long-term-care insurance premiums
  • Health insurance premiums (if not taken out of your paycheck)
  • Cable TV, Internet, phone and cellphone
  • Gym or yoga memberships
  • Debt payments (credit cards, student loans, car loans, personal loans, etc.)
  • Savings (yes, this is an expense – pay yourself first!)

Variable expenses might include:

  • Groceries
  • Eating out
  • Gas
  • Clothing/shoes
  • Personal services (haircuts, doctor visit copays, etc.)
  • Entertainment

2. Distribute money to the accounts.

When your paycheck comes in, allocate the designated amounts into each checking account based on the budget you created. The sum earmarked for the curveball account can go there directly.

3. Pay fixed costs directly.

All bills are paid automatically from our fixed-expenses account. We do not have to write any checks, and no debit card is necessary. This account has a cushion of a few hundred extra dollars in case a bill shows up unexpectedly or before we have a chance to replenish the account.

4. Pay variable expenses from the second account.

This account should have a debit card, which you can use for purchases.

5. Link the curveball account to either checking account.

If an emergency arises, you can transfer funds within 24 to 48 hours. You can then access the money with a check or debit card.

Realizing the benefits

Once I implemented this system, the process of tracking expenses wasn’t so cumbersome anymore. Separating expenses into fixed and variable categories meant I didn’t have to worry constantly about checking account balances. Having fewer transactions in each account also made it easier to see the bigger picture of our spending.

The chart below depicts the flow of money.

Money Flow Chart2

* After taxes and pre-tax retirement plan contributions.Chart courtesy of MainStreet Financial Planning

Every family’s finances are different, of course. Feel free to customize my system as necessary. The point is to get – and keep – a grasp on the flow of your money. If you know exactly what’s coming in and going out, you can’t be surprised by debt.

Source: Planner shares system for managing money – Business Insider