Refinance with Quicken Loans
Find Refinancing Offers at Quicken Loans

homeowners home

"Fast Track" The Equity In Your House
How $75 per month can save you thousands

house equityMost people would agree that the quicker you increase the amount of equity you have in your house, the better your financial picture becomes. Increased equity means you are closer to paying off your house, allows you room to borrow (if necessary) against that equity, and strengthens your net worth.

Most people agree, but many do not know how to get to that position of increased equity. To "go with the flow" of a 30 year mortgage--paying it as it is structured by the mortgage company--means that equity growth will be very slow at best. Take the following example of a 30 year mortgage at 8.00% APR with an initial loan amount of $100,000.

End of Year #

Total to Principal

Total to Interest

Balance

1

835

7970

99165

5

4930

39096

95070

10

12275

75776

87725

15

23218

108859

76782

20

39522

136581

60478

25

63812

156317

36188

30

100000

164155

0


Note that after 20 years of payments--2/3rds of the mortgage term--you still owe over 60% of the original mortgage amount. At 25 years, you still owe over 36%!


As a contrast, watch what happens to your balance (and thus, your equity) with an additional $75 per month added to your payment and applied to the principal.

End of Year #

Total to Principal

Total to Interest

Balance

1

1769

7936

98231

5

10441

38065

89559

10

25996

71055

74004

15

49171

96406

50829

20

83699

110405

16301

25

PAID OFF

PAID OFF

PAID OFF

30

PAID OFF

PAID OFF

PAID OFF

The mortgage is paid in full in 21 years and 10 months. Even more important, look at the difference in the balance at the end of 15 years. The $75 per month extra that you have paid for 15 years ($13,500 in total extra payments) has bought you $25,923 in
additional equity! Figures deemed reliable but not guaranteed. Consult your mortgage company to make certain that they will accept additional principal payments.

OKAY...it makes sense. But where do we get the extra $75 per month?

house checklist

remodel your house

refinance your house

repair your house

house maintenance

a safe and secure house

house organization

resources for your house

links to more information on houses

 

 
 
 
 
 
 
 
 

Related Topics

Refinancing your house

Your household budget

 
 
 
 
 

RECOMMENDED READING

 

Mortgage-Free! : Radical Strategies for Home Ownership
by Rob Roy, Robert L. Roy

 

How to Save Thousands of Dollars on Your Home Mortgage by Randy Johnson

   
 

Home | Your Checklist | Remodel | Refinance | Repair | Maintain
Safe & Secure | Organize | Resources | More Links