here are some great tips on how to calculate a mortgage to pay it off fast and some ideas on how to handle your pay plan. The ideal loan you want to be in is a fixed rate loan that will not change. 10, 15, 20, 30, or even 40 year fixed. Make sure you do not get suckered into the 2 year “fixed” and adjustable mortgage. After 2 years, your mortgage that you could afford to pay will skyrocket to the new adjustable rate that could change monthly, bi-yearly or yearly depending on the terms of your mortgage. Make sure you calculate your mortgage payments correctly.

Here are my quick tips to saving money with your mortgage:

1) Always pay MORE than your monthly bill, even if it is $5.00 more! I round my monthly payment to the nearest $100 to make it nice and even and that makes me pay about $55 more every month toward my mortgage that I do not have to pay interest on anymore.

2) Setup Bi-weekly payments. Most people already know this technique you take your monthly payment and divide it by 2 (mortgage payment / 2) and pay that amount every 2 weeks, this equals out an extra mortgage payment a year. So you will be making 13 payments a year instead of 12 payments. On a 30 year fixed loan, this will shorten your mortgage by 7 years! Try this program (free) to see how much you will save doing bi-weekly payments [ Click Here ]

EXAMPLE: $120,000 mortgage, 30 Year Fixed, 6.5% interest rate

Using accelerated bi-weekly payments repay your mortgage in 24.1 years.

Using accelerated bi-weekly payments also reduces your total interest payments from $153,055 to $117,805. This is a total interest savings of $35,249

3) Part of step 2 is to AVOID 3rd party companies that will charge a fee to do this for you! Why pay someone to do a bi-weekly payment and have them pay the full amount at the end of the month for you, when most banks and even mortgage companies that do online bill pay can set this up automatically for you. AVOID THIS SCAM!

4) Never pay only interest! If the only thing you really can afford is paying only interest, then at least pay a little more even $5 more than interest. AVOID the 1.9% payment option or the “choose your payment” loans. If you have one, check out your monthly bills and notice that your loan is growing out of control if you continue to select the lowest payment plan. Why does this happen? The interest you should be paying just gets added to the mortgage itself on the back end.

5) PMI - As soon as your mortgage is at 80% or less than the value of your house and you are still paying for PMI. Call your mortgage company to get it taken off. Sometimes they will send out an appraiser to make sure the house hasn’t depreciated in value and they will take it off and this will save you ALOT of MONEY that you could be putting toward your mortgage.

Quick summary: Always pay more (even $5) every month toward your mortgage, try the bi-weekly payment plan to reduce the length of the loan, and take of PMI as soon as possible.

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