8 WAYS TO PAY OFF YOUR MORTGAGE FAST!!! 6 Traditional Ways Let's highlight 8 ways you can pay your mortgage off faster. The most traditional way is to add more money to your monthly payment each month. Another is to make an additional lump sum payment each year. Another is to make lump sum payments as you have extra money. You can switch from the 30-year loan to a 25, 20, 15, or 10-year loan. You can switch to a bi-monthly payment loan or you can set up with your current lender or a third party to collect your payments on a bi-weekly schedule. These are all effective time-tested ways that work for two reasons. The first is obvious- you're paying off the principal at an accelerated rate. The second is that you're saving interest because your principal balance is being lowered faster than scheduled. Depending on how aggressive you are, you could pay off a 30-year loan in as little as 7-10 years or as long as 23-25 years. The disadvantage with all of these methods is that once you pay down your loan, if you want to use your equity for some reason, you must either refinance or sell the property. A Newfangled Loan That Can Pay Off Really Fast! Now let's look at two newer and very creative ways to pay your loan off faster. The first is a loan that works much like the above methods, but it's like putting them on steroids. It’s called the Home Ownership Accelerator loan. The loan ties together a checking account with an equity line on your house. The idea is to put all your paychecks, bonuses, commissions, gifts, rent checks, and other deposits into your new checking account. This money is then swept into your equity line account immediately, lowering its balance. When you pay bills, you pay them out of your new checking account that’s tied to the equity line. As your checks come in for payment, the money is pulled from your equity line. The net effect is that your loan amount is lowered 3 ways. First, it’s lowered by what would have been your average daily balance the way you currently operate your checking account. Instead of earning little or nothing on your checking account balance, you are now earning at the interest rate on your loan by having your average daily balance applied to lowering your loan balance each and every day. If you are a good saver, you could pay your loan off in 10 years or less. Average savers pay their loans off in 15-20 years.  Second, you earn the float on your account, since when you write a check, you're still saving money on your lower loan balance until the check clears and is paid by your equity line.

Third, you can still pay down your mortgage the traditional way by putting any gifts, inheritances, bonuses and other money into your account. In other words, you are your own bank! And it gets better. Since your loan is actually an equity line, whenever you need money, you simply write a check for the amount of your available funds. No qualifying, no payments for an appraisal, no points, no nothing. Awesome, dude! Pay Your Loan Off Faster Using a “Side Account” The other creative way to pay your mortgage off faster is to take any money you would have applied towards paying off your loan faster and put it into a side investment account. There are many ways you can invest this money: mutual funds, stocks, real estate, and real estate notes are the most popular. Historic long-term rates of return on these investments have been higher than mortgage rates. Due to the miracle of compounding, this strategy can lead to having a side account that is equal to or greater than your mortgage balance within 15 to 20 years on a 30 year mortgage. Even though you haven't paid off your mortgage, you could any time you wanted to. Unlike paying off your mortgage the traditional way, this method gives you more options. Your equity is in your side account rather than in your house. If you have a need, you don't have to refinance to access your equity. Just tap into your side account. So if there's an earthquake or other natural disaster, or if you lose your job, become disabled, or whatever, you don't have all your money tied up in the equity in your home and not have it available for your use. There you have it. Eight great ways to pay your home loan off faster, six traditional and two new ways. We happen to like the newer ones, because they'll help you accumulate wealth faster. But whatever way you want to go, let us know and we'll be glad to help you. By the way, if you'd like an analysis of these different alternatives, we'd be glad to provide one at a very reasonable cost. We have some great software that we can use to run the numbers for you. ++++++++++++++++++++++++++++++ There are two things you want to do: 1. Earn at the same rate, or higher than your pay on your mortgage on an after tax basis. 2. Keep the money in lower risk investments. You don't want to lose it. -Ed email me