Erase Debt! Innovative Ways to Retire with Dignity
A father struggles to keep food on the table. A single mother is unable to afford her child’s needs. A college graduate can’t pay off his student loan because his job doesn’t pay enough. Millions of stories, all including one common problem, DEBT.
The shackles of debt
We’ve all been there; from student loans to credit cards, auto loans, and mortgage debt, debt has been a part of our lives. Who doesn’t want to be free of debt obligations and become financially free? That’s the dream! But sadly, not everyone can pay off their debt successfully.
Becoming debt-free is the priority of the majority of the people. However, few succeed in becoming completely debt-free before their retirement. An estimated 80% of Americans have one or more debts looming over their heads.
This is a considerable number.
Debts ruin the lives and dreams of individuals and have an impact on their mental well-being. Many Americans work 2-3 jobs to keep up with the overwhelming debt payments. However, ironically about 70% of Americans say that debt is a necessary evil that they must have to survive. So, the problem is not with having debt, but instead with managing it. With proper debt management, you can minimize the debt amount or eliminate it in about half the time.
But how to better manage your finances?
Here we will demonstrate how you can turn debt into wealth and retire with dignity!
Mortgages are the most significant debts that Americans are carrying. Paying off debt is no easy feat. However, there are specific methods that you can pursue to reduce the total debt to be paid.
Understanding accelerated mortgage
Let’s say you want a new and bigger house, but your credit is not as excellent or near-perfect as you want it to be. Banks will still lend you money, but you will have a higher interest rate due to the increased credit risk. One option is to keep paying your current mortgage on time to improve your credit score.
An even better option is to accelerate payments on your loan. Why? You will save on interest fees and other expenses. Remember, the interest rate applies to the current principal amount that you owe your creditor each month. Weekly payments or biweekly payments can help accelerate your mortgage debt payments and thereby reduce your overall debt.
To understand the concept of accelerated mortgage, consider the example below:
You have a mortgage debt of $225,000 with a 30-year fixed-rate mortgage at 4.5%. Your monthly payments would be $1,140.04, and the total repayment over the years would amount to $410,415.10.
Most financial experts recommend a 15-year mortgage. The bank interest paid on the 30-year loan is exuberant. In our example above, a $225,000 fixed loan at 4.5% of interest means that the total repayment is $410,415.10. That’s $185,415.10 in interest that the bank is earning. This is about the same amount that the homeowner borrowed.
In a 15-year mortgage under the same terms, the monthly mortgage payment is slightly higher to $1,721.23. However, the interest the homeowners pay to their bank significantly decreases to $84,822.28, which is about $100,592.82 worth of savings!
By accelerating your loan, you will save $31,137 in unnecessary interest. You would pay off your mortgage in approximately 24 years instead of 30. It’s not magic; it’s math! Because now you are paying more towards the principal each month. This option also lowers the amount you pay in bank interest. Again, this shortens the term of your loan and decreases the overall cost of your home. That’s $31,137 you can use to pay off other debts or save for your retirement!
What if you find yourself in a financially difficult place? Are you still able to accelerate your mortgage? MAYBE! Mortgage acceleration plans of this sort require lender approval, especially when you are re-amortizing or recasting your mortgage loan.
Re-amortization qualification varies by lenders. You pay a lump sum and ask your lender to reduce your mortgage payment. However, you have to be sure that this is the best option for you, especially if you need a quick solution to your financial situation.
Suppose a bigger house is what you need to accommodate your growing family. In that case, we recommend you set aside 20% or more down payment to avoid Private Mortgage Insurance (PMI), which will save you quite an amount on your monthly mortgage payment.
If the higher monthly cost of the 15-year mortgage is not in your budget, you can choose a 30-year mortgage and pay it like a 15-year mortgage using our preferred biweekly payment system. There are THREE advantages.
- Your monthly payment to your mortgage lender is lower
- The amount you pay to your lender in interest is lower
- There are NO CREDIT QUALIFICATIONS. Plus, if you ever find yourself in a budget crunch, you can always go back to your original payment amount.
If your goal is to save money and become debt-free fast, choosing the best mortgage solution will help you accomplish it. Statistics show that today, most American homeowners can’t retire because they still have a mortgage to pay. If this describes you or someone you know, there is a way to accelerate your mortgage payments without a re-amortization or recasting of your loan. How? With our Mortgage Eraser Program!
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