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Apply the "3% Rule" to your 30 Year Mortgage Here's how it works. You pay your regular monthly payments for the first year of the loan. At the beginning of the second year, take an amount equal to 3% of the monthly principal & interest portion of your bill (it's itemized on your statement), and include it as additional principal with each payment for that year. Repeat the procedure for each subsequent year, and in about 15 years - you own your home. As an example, consider a $100,000, 30 year loan at 9-1/2% |
|
Monthly Interest Principal |
3% Additional Payment |
Total Monthly Payment |
|
1st Year |
--------- |
$840.85 |
|
2nd Year |
$25.23 |
$866.08 |
|
3rd Year |
$25.98 |
$892.06 |
And so on..... In effect you're giving your lender an "annual raise" of 3% -- almost certainly less than the cost of living. And the reward its full ownership of your home in about half the time called for by the terms of your mortgage!!
Alice & Jim Hayes - Team Hayes Realtors - Loveless Realty, Libby, MT
alice@alicehayes.com or jim@alicehayes.com
Enjoy our 24-hour open house at www.alicehayes.com
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