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Turn Extra Mortgage Payments Into Thousands in Savings
February 24, 2016
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Loans
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Home Ownership
Like to save money?
We thought so! And here’s a way to save big that you might not know about: pay a little extra on your mortgage each year.
In fact, if you make just ONE extra mortgage payment every year, you’ll cut years and, potentially, tens of thousands of dollars, off your loan. (It’s true! Just check out pages 56 and 57 of your Red Shoes handbook for an example of how this works).
How can you “find” the extra cash to make this happen?
Ok, making an extra payment sounds easy. But where is that extra money going to come from?
Here’s what Summit Credit Union mortgage loan officer extraordinaire, Debbie Olson, has to say on the subject.“People don’t realize how little it can take to knock years off your loan. Set a goal of saving 1/12 of your mortgage payment every month. Make small changes like bringing in a bag lunch or not buying that daily latte – that money adds up quickly. Or maybe you can cut cable or get a better deal on your phone provider. Before you know it, poof, you’ll have money you need.”
Another easy way to make that extra payment? “If you get a raise at work, funnel some of it into your mortgage payment,” Olson recommended. “Do this right away and you won’t even miss it.”
You can also set up an automatic payment right out of your paychecks, again, with the idea that you don’t miss what you don’t see! (Kind of like putting the cookies into the cupboard!). But, be sure to make sure it’s earmarked as a principal payment (see below!).
“Just come in and talk to your mortgage lender,” Olson urged. “We’ll walk through your budget and help you find the option that makes sense for you.”Make sure your extra money goes to PRINCIPAL
Before you start putting that extra money in savings,
>>
and ask them to apply your extra payments to your principal balance. This is critical. It will not happen automatically just because there’s extra money in your account.
What if you find yourself strapped for cash some month?
Because the extra payment is just that – extra – you never have to make it. And you can always pay a little less one month and a little more another. The important thing is that you make at least the equivalent of one extra payment over the course of any given year.
Sure, you might occasionally miss that latte or lunch out – but think of the long-term benefits of paying off your mortgage faster! Your million is out there and this is a great step to help you get there!
Not a Red SHOES member? Gain control and be confident in your financial decisions with this exclusive financial wellness program.
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Financial success isn’t how much money you have — it’s feeling good about what you’re doing with the money you have.
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Get Savings And Stability With Summit’s 15/15 Arm
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An easier, more affordable way to buy, build or refinance a home A house is one of the biggest purchases you’ll probably ever make. Which means you really (really!) want to be sure you’re getting the home loan that’s right for you, and that just might be a 15/15 Adjustable-Rate Mortgage (ARM)! But first, let’s look at some helpful background, starting with the two main categories of mortgages – fixed-rate and adjustable-rate.
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Using Your Home Equity: Loan Vs Line Of Credit
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Home equity loan or line of credit (HELOC) — which one’s right for you? Thinking about making some home improvements this fall — or planning ahead so you’re first in line with your contractors next spring? Then you’re probably on the lookout for affordable financing. One option that could be a good fit: tapping into the equity of your home.
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Tips for Managing Money and Paying Off Student Debt After Graduation
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Navigating finances after college is hard, but you can take it one lesson at a time. Get tips for managing money and paying off student debt after graduation. Navigating finances after college is hard, but you can take it one lesson at a time. Get tips for managing money and paying off student debt after graduation.
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4 Financial Tips To Consider When Borrowing Money For The First Time
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Sometimes having a little extra cash is the only thing between you and your dreams. Check out these financial tips to be smart about borrowing money and avoid common mistakes.
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Tips & Advice For Your First Time Buying A Home
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Buying your first home can be intimidating, so we asked real people to share their new homeowner tips. Find out their strategies to ace the homebuying process.
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How to Save Money When Buying Your Next Car
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Buying a car is a big purchase, but if you play your cards right, you can get a good deal. Learn how to save money at every step of the car buying process.
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Ask Kim: Navigating Home Equity Loans
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Yes, it’s possible to create the home of your dreams, and it may be easier than you think with a home equity loan. But how does it work? Get up to speed with these tips from our very own Kim Sponem.
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Car Buying Made Simple(ish)
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Buying a car is a big deal — hey, those things are expensive! And even if picking out a vehicle is one of your most favorite things ever, it can still be a bit stressful to navigate researching and buying a car. Summit’s got three tips to help make the process as fast and easy as possible.
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The Wisconsin's #1 Mortgage Lender designation is based on the number of loans in 2022, gathered from the Home Mortgage Disclosure Act data compiled annually by the Consumer Financial Protection Bureau. The results of the data were obtained through the