FinanceAdmin•Yahoo Finance RSS•a day ago
Suze Orman's Strategies for Accelerating Mortgage Payments
Suze Orman shares effective strategies for paying down your mortgage faster, including biweekly payments, refinancing options, and using windfalls to reduce principal.
- • Suze Orman emphasizes the importance of understanding your mortgage terms before making any extra payments. Knowing whether your mortgage has a prepayment penalty can significantly affect your decision to pay off your loan early. If there are penalties, it may be more beneficial to invest that extra money elsewhere rather than facing additional fees.
- • One of Orman's key strategies is to make biweekly payments instead of monthly payments. By splitting your monthly mortgage payment in half and paying that amount every two weeks, you effectively make one extra payment each year. This approach not only reduces the principal balance faster but also decreases the total interest paid over the life of the loan.
- • Orman also suggests considering refinancing your mortgage if it can lead to a lower interest rate. A lower rate can reduce your monthly payments and the overall cost of the loan. However, it's crucial to calculate the costs associated with refinancing, such as closing costs, to ensure that the long-term savings outweigh these upfront expenses.
- • Another tip from Orman is to allocate any windfalls, such as tax refunds or bonuses, directly toward your mortgage. This strategy can make a significant impact on reducing your principal balance and can help you pay off your mortgage years earlier than planned. It's a proactive way to leverage unexpected income to achieve financial freedom sooner.
- • Lastly, Orman advises maintaining a budget that allows for consistent additional payments toward your mortgage. Even small amounts can accumulate over time and lead to substantial savings on interest. This disciplined approach not only helps in paying down the mortgage faster but also fosters better financial habits overall.
Source: Yahoo Finance RSS
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