By Bob Meyer

Could you increase your trading efforts to bring another $100 or more in every single month? Doesn’t sound too hard does it? In fact it’s such a puny goal that it probably doesn’t even inspire you!

But when you look at what an extra $100 will do for the building of security and your peace of mind, it may suddenly get you moving. Here’s what I mean…

Take the $100 and make an extra payment on your home mortgage every month to reduce your loan. In most states lenders may not impose prepayment penalties after five years from the date the loan was issued.

In addition, you may prepay up to 20% of the original loan during the first five years without penalty. The benefits of prepaying your loan are clear. The faster you pay down the loan, the less interest you pay.

By making just one extra monthly payment a year, you can cut seven years off the life of a 30-year loan. (That equals $92,700 in saved mortgage payments—based on a $200,000, 30-year fixed-rate loan at 8%.)

But before you start making prepayments, it’s a good idea to call the lender or loan-servicing company and ask it they have any preferred method. You can write a single check, but be sure to include a note explaining that you want the extra amount to be applied directly to your principal.

Otherwise, the money may be applied to your next month’s payment, which won’t reap the interest savings. Also, keep a copy of the check and your note just in case there is confusion down the road.

This entry was posted on Thursday, February 22nd, 2007 at 10:23 am and is filed under Entrepreneurs & Small Business, Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.