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PLAN 8: BUILD UP EQUITY QUICKLY FOR YOUR NEXT HOME
You have seen how much money you can save over the life of the mortgage. You may be hesitant to start prepaying if you plan to move in a few years. You may think you will not reap the benefits of the savings. If you plan to move in a few years, think of prepaying as a forced savings plan for the next house. Using our $250,000 loan again, at the end of 5 years you would still owe $232,635.64. But if you prepaid $250.00 a month, at the end of 5 years you would only owe $215,193.15! You would then have an extra $17,442.49 in equity to put towards your new home. Remember that $17,442.49 in equity is built-up tax-free. If you were to deposit $250 a month for 60 months into a bank, you would have to earn about 6% in taxable interest to have $17,400. Is your bank currently paying over 6% on your money? Can you earn 6% on an investment as RISK FREE as prepaying your mortgage? Think about it. Prepaying for your next home can be a safe, painless and efficient way of saving.
BUILD UP EQUITY QUICKLY FOR YOUR NEXT HOME