Are you getting ready to purchase your first home - becoming a first-time buyer? Fortunately, interest rates have gone down the last few years. Of course, the better your credit, the better your rate will be. Maybe you’ve already purchased a home and would just like to get it paid for. We often think we are getting great deals, but sometimes you just need to look into the subject a little closer. Even with a low interest rate, take a look at your monthly statement. See how much you are actually paying towards the principal. Look at what you’re paying towards the interest. Surprised? Where is that cheap interest rate? Well, that is the power of compound interest, and it is definitely NOT in your favor. Do you enjoy giving hundreds… thousands of your hard-earned dollars away? This is what’s happening if you are only making the minimum, monthly payment. Whatever it takes, stop making the minimum, monthly payment. Look for ways to add extra money to your house payment (principal). Trust me - if you are consistent - you will save thousands over time and get your home paid for much quicker. Attached is a form that might be of some help to you. It is what I use to keep a record of my mortgage payments. I like to see just what percent I am paying towards my monthly principal verses my interest. This gives me the extra drive to beef up the principal. Here are a few ways you might be able to accomplish the task:
- If you’re getting income taxes, discipline yourself, and use it to help pay off your home.
- Merit Raises are a great way to increase your principal.
- Cost of Living Raises
- Side jobs
P.S. Credit Karma is a nice site to help you track and fine-tune your credit. They have good recommendations and e-mail you when there is a change in your credit report. My wife and I started using the site last year, and it has been very beneficial to us.