How to Pay Off Your House in the Same Time Most Folks Pay Off a Car:
It’s a simple formula, really.
1) Take the current principal balance of your mortgage.
2) Divide it by 0.0316 — that’s 3.16% of your principal balance.
3) Pay 3.16% of that balance all towards PRINCIPAL. This may be in ADDITION to your monthly regular mortgage payment. Check your monthly statement to see what amount of your regular payment goes to principal, and what goes to interest and escrow.
4). Pay EVERY MONTH 3.16% of your current principal balance, beginning NOW.
5) If you don’t skip any months, you will pay off your mortgage in 32 MONTHS. That’s less than three years.
For instance, let’s say your current principal balance is $100,000. 3.16% of that is $3,160. That’s the amount that must go entirely towards principal Let’s say you have a monthly mortgage payment of $1000, of which only $200 goes to principal. $3160 minus $200 is $2960. Add this $2960 to your $1000 usual monthly payment, for a total payment of $3960. Pay $3960 every month for 32 months, reducing your principal balance to $2040. On the 33rd month, pay that last $2040.
The Hubby and I are fortunate that, right now, our principal balance is only $9,372 more than our yearly net income and that our monthly expenses (including our usual mortgage payment) is only 62% of our monthly net income. (Just so you know, our usual monthly mortgage payment is 17.6% of our monthly net income). That leaves 38% of our monthly net income to play with, in our case, to achieve mortgage solvency ASAP, if we choose to do so.
Try out the formula. See how near (or far) mortgage solvency is for you.
Home ownership rocks! And it’ll be a happy day when the house entirely belongs to me and the Hubby, instead of my mortgage lender.