Many people have lost homes as a results of the recent crash of the mortgage and real estate market. These losses occurred for many reasons including:
- Loss of jobs / income.
- Having an adjustable rate mortgage increase.
- Buying a home they could not afford and depleting their savings.
- Losing tenants.
- Not being able to acquire tenants after buying an investment property
The fact of the matter is that most people never really own their homes anyhow. They pay a very small portion of that mortgage off every month with their mortgage, but the lender still calls the shots. If you can’t pay, you can’t stay – it’s that simple. so the obvious way to keep from losing your house to the bank is not to have it financed by the bank. Renters rarely have to deal with this issue, although if your landlord does not pay his mortgage, you will be forced t move – and often without much notice (this just happened to someone I know). Many people do not see paying off their mortgage as a possibility, and that is because traditional “wisdom” has planted that in their minds. I know people who do not have a mortgage and it is not that difficult to get your mortgage paid off early if you just know how to play the game.
I want to discuss a few common ways that people pay off their mortgages early. You might have heard of them, but most likely you have not heard of all of them.
1. Bi-Weekly Mortgage Plan. Under this plan, you essentially pay an additional mortgage payment each year and it cuts off about 10 years of a 30 year fixed loan. The theory is based on the fact that you cannot pay interest on principal that does not exist. If you pre-pay the principal, the interest is removed from the latter payments of the mortgage.
2. Money Merge Account. This is a product of a company called United First Financial. It is a financial planning tool and helps you maximize paying off all of your debts including your mortgage in under 10 years. The program has lots of benefits, however you need to have (or create) a few hundred dollars in surplus money to start the snowball effect.
3. Infinite Banking Concept. This is the most ingenious, consumer friendly financial concept ever discovered. It has been around for years, however, it was not until very recently that financial professionals have started to embrace this concept. The premise is that through the power of specific insurance products, you can accrue value in a policy that you can borrow from and pay yourself back with interest. The policies also have a death benefit so it serves as protection in the event of death, but the most powerful function of this financial vehicle is that it allows you to basically “become your own banker”. You can learn more about this through the book Becoming Your Own Banker by Nelson Nash. It is likely the most powerful financial concept you will ever learn about.
Many people don’t see paying off their mortgage as a reality, but it is possible and using these financial strategies you can certainly accomplish it much faster than if you don’t have a system.