"One extra monthly payment per year on your mortgage will shorten the length of your loan by years!"
This week’s money tip shows the strength of compounding multiples, but instead of interest, we are looking at compounding amortization. During the early years of paying down your mortgage, a large proportion of your payment is going toward interest. As the years progress, the majority of each dollar spent is going towards the debt, instead of the interest, thus paying off the principal you owe rapidly. Getting to this later stage of paying off your mortgage as soon as possible is a huge win mentally, will help you build equity, and can be relatively easy.
If you do not know where to start, try paying an extra $50-$100 each month on your mortgage, it will start to add up. Make this a goal and shoot for having the extra dollars you put toward your monthly payment add up to a full extra month of mortgage payment. Watch your mortgage duration shorten over the next 15-20 years while alternative investment options open, as your disposable income and savings rise.
