Mortgage Strategy If You Already Have a Home Loan
by Mogamahttp://mogama.info
If you already have a lien on your home, and you did not use the Debt Freedom Club winning strategy, it's not late. You can still follow Plan B to become a winner in the mortgage game. While making the minimum payment on your mortgage, take the following steps...
- Pay off all other debts, using the Debt Freedom Plan aka the Debt Snowball. (See another post on this blog if you don't know what the Debt Freedom Plan is.)
- Refinance your home loan to a 15-year fixed rate loan, if you currently have a 20- or 30-year loan.
- Make weekly or biweekly PC (Principal Curtailment) payments on your mortgage until you've paid the loan down by 20%, which means you have 20% equity - another way of saying you have 80% balance on the loan. Because you have 20% equity, you can drop PMI (Private Mortgage Insurance) or MIP (Mortgage Insurance Premium); this can take a big chunk out of your monthly house payment.
- Ask your banker to give you an Escrow Waiver Statement for you to sign. By waiving escrow deposits, you will directly pay your own property taxes and hazard insurance (home owner's insurance). With all these escrows separated from your house payment, your monthly payment will be P&I (Principal and Interest) only, the way it should be.
- Continue to make weekly or biweekly PC payments on your mortgage.
- Set your debt freedom target of 7 to 10 years, and get in a hurry to pay off your mortgage in 7 to 10 years.
That's your winning strategy, if you already have an existing home mortgage.
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Article submitted Tuesday, December 29, 2009 & read 31 times.
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