Mortgage Reduction: Cut Your Mortgage in Half Legally

Aghast at how little of his monthly payments went towards his loan principal, the author looked into alternatives and discovered that mortgage reduction was really pretty simple.

| July/August 1981

  • 070 mortgage reduction
    Follow a mortgage reduction plan and the property you're trying to own will be less of a burden.

  • 070 mortgage reduction

I'll never forget the day I received my first home mortgage. The $247.50 monthly payment represented just about the most awesome figure I had ever seen, and the thought that I would be 58 years old when I eventually got my 30-year mortgage paid off seemed nightmarish. However, the biggest shock came when I realized that the actual cost of my home would more than triple —escalating from $26,300 to about $90,000—simply because of the 11.5% interest I would be paying over the next three decades. At the time, it seemed as if I'd never experience the exuberance of being able to say, "I own it free and clear."

In fact, I was so distressed by the sheer size of my self-imposed debt that I finally decided to discuss the situation with my banker. She told me about a very easy, legal, and logical method of mortgage reduction that would cut the life of my loan in half, thereby eliminating morethan50% of the interest charges!

Simply put, each monthly mortgage installment comprises an interest charge and a payment applied to the principal amount of the loan. (Some lenders include insurance and taxes as well.) As long as the balance owed is high, the interest charges will be high. Therefore, by adding extra amounts of principal to each mortgage payment one can save thousands of dollars in interest expense.

Let's take the case of my own mortgage as an example. At the end of my first year, I'd shelled out $2,866.81 in interest and only $103.19 of the principal. In effect, I had paid the lending company almost $3,000, and reduced my loan by a whopping $100!

My banker advised me to include five extra payments on principal along with every regular monthly mortgage installment. By starting right then and keeping up that system for three years, she said, I could reduce the term of my obligation from 30 years to 15.

Well, I could hardly believe it, but it's true. I checked with two other bankers, a financial consultant, and some other business people I knew. [EDITOR'S NOTE: MOTHER EARTH NEWS did some checking, too, and found Dennis's plan to be workable for most mortgages. However, some mortgage contracts include a "prepayment penalty clause." If yours does, it may cost you money to pay off your debt early! In addition, for persons who hold a mortgage with an interest rate below 10%, it maybe more prudent to invest extra funds elsewhere at current market rates rather than to reduce a more "inexpensive" loan. And—as always—individual savings and loan institutions will have varying policies, so it's a good idea to discuss the plan with your lender before you begin to make additional payments.] By the time you read this, of course, a home costing $26,300 with an 11.5% mortgage will probably seem like a fantasy, but the method won't change regardless of how high prices or interest rates rise.

How to Begin

In order to apply the program to your homestead debt, you'll first need to obtain the mortgage amortization schedule specifically calculated for your loan. (If you don't have a copy, your loan company may charge about $5.00 to provide you with one.) Now, figure out how many payments you've already made so you can identify the interest/principal breakdown on the next month's installment. When you write out your check, add—to the amount you'd routinely owe—the total of the following five months' principal payments (they'll be surprisingly small) and pay the entire sum to the mortgage company.

3/17/2018 3:20:33 PM

I AM FINALLY FREE FROM FINANCIAL BONDAGE THANKS TO MOORE LOAN COMPANY ( Good day everyone,I can’t hide this great testimony that took place in my life I will love everyone to know it and be a partaker of this, that is why I want to share it to the whole world by placing this advert on classifieds, I am Mrs Karen Brown by name, I live in Chattanooga, Tennessee United State, I want to thank ROBBINSON MOORE for his kindness upon my family life, I never knew that there is still a sincere and trustworthy lender like this on the internet and on earth. Just some days I was in search for a loan of $ 100,000.00, As I was running out of money for feeding, School fees, My business was really going out of capital and my rent. I was scammed about $15,000.00 dollars and I decided not to involve my self in such business again. But a Friend of mine introduced me to a loan firm due to my appearance and doings and also my complains to her. And I told her that I am not interested in any loan deal anymore but she told me that there is still a sincere lender who she will recommend me to, And she gave me the details of this man who is called MOORE ROBBINSON. And I really put a trial and I am most greatful and lucky today, I was given a loan amount of $95,000,00 Dollars by this great firm MOORE LOAN COMPANY. If you are in need of a genuine, Sincere, durable and a truth worthy loan lender or financial assistance and also you know you can be reliable and trusted, capable of paying back at the due / duration time of the funds I will advice you to send your contact to them via email @[] OR Test (414) 454-9493 . And you will be free from scams on the internet. Please I am begging everyone on earth to help me thank Mr ROBBINSON MOORE. And I will always being sharing this great surprise and testimony that happened in my life everyday to all that need loans. Contact them now if you are in need of a loan: AS THEY ARE EFFICIENT,DYNAMIC AND RELAIBLE.....Again there contact email [ OR Text (414) 454-9493.

Mother Earth News Fair Schedule 2019


Next: April, 27-28 2019
Asheville, NC

Whether you want to learn how to grow and raise your own food, build your own root cellar, or create a green dream home, come out and learn everything you need to know — and then some!


Subscribe Today - Pay Now & Save 64% Off the Cover Price

Money-Saving Tips in Every Issue!

Mother Earth NewsAt MOTHER EARTH NEWS, we are dedicated to conserving our planet's natural resources while helping you conserve your financial resources. You'll find tips for slashing heating bills, growing fresh, natural produce at home, and more. That's why we want you to save money and trees by subscribing through our earth-friendly automatic renewal savings plan. By paying with a credit card, you save an additional $5 and get 6 issues of MOTHER EARTH NEWS for only $12.95 (USA only).

You may also use the Bill Me option and pay $17.95 for 6 issues.

Canadian Subscribers - Click Here
International Subscribers - Click Here
Canadian subscriptions: 1 year (includes postage & GST).

Facebook Pinterest Instagram YouTube Twitter flipboard

Free Product Information Classifieds Newsletters