Saving / Making Money from your Mortgage

As much as this may not sound like you are making extra money, I would disagree. To me if I can save money in the long run by putting more money in your pocket or not spending as much, then it’s just like making extra money! I’m going to share some tips I’ve used to save me a tonne of money on my mortgage thus far. If you follow these simple steps you will save anywhere from a few hundred to a few thousand dollars or more depending on where you are in your mortgage! The first thing I would suggest is you get an amortization payment schedule for your mortgage so you can see exactly how much money you are paying in interest and compare how much of that you can save with my tips below. You can get this schedule from you lending institution or go to ??? and put your mortgage details in here for a schedule. Okay, now let’s save some money!

1. Set your mortgage up for bi-weekly payments. This will shave almost 5 years off a 25 year amortized mortgage because you end up making 1 extra payment a year compared to monthly. Let’s say you mortgage payment is $1000 a month. If you are paying monthly, you would make 12 payments of $1000 for a total of $12,000 a year. If this is set up bi-weekly, you would make 26 payments of $500 for a total of $13,000 a year.
   
   
2. Make a lump sum payment. Most mortgages will allow you to make yearly lump sum payments to some degree. My mortgage will allow me to pay up to 15% of the principal amount yearly. If you receive a tax payment or some other form of payment that may not be expected (I.e. Inheritance, lotto winning, etc) be sure to place some or all of it towards your mortgage. This is even more effective if you have a newer mortgage because mortgages are front loaded with interest. What I mean by front loaded is that most of your payment in the early part of a mortgage is interest while in the last few years most of the payment is going to principal. Banks aren’t stupid and they are also money hungry PIGS if you ask me so they ensure they get their interest early in case something was to happen down the road! As I was saying, these lump sum payments will go directly against the principal amount which can save you a tonne in interest of the years to come because every payment you make after the lump sum, more of these payments will go towards the principal. Let’s go through a scenario. Assume a mortgage amount of $200,000 amortized over 25 years at 6% making monthly payments. Let’s say 8 months into the mortgage you got a tax check back for $2000 and applied that to the mortgage. This would save you $6544.68 in interest payments and pay off the mortgage 6 months earlier! Imagine if you could apply a lump sum each year…you could pay off your mortgage in half the time!
   
   
3. Round up your payments! That’s right, you can save a good chunk of money by rounding up a few dollars. I had a mortgage payment of $710.88 which I rounded to $725. The extra $14.12 per payment is now going directly to the principal. This will save me a few thousand bucks if I start this early on!
   
   
4. Keep you payments the same if mortgage rates fall. If you are accustomed to paying $700 bi-weekly and you new mortgage rate lowers your payments to $675, keep paying the $700. Once again, the extra $25 each payment will go directly to the principal saving you a bunch in interest.
   
   
5. Increase your payment if your income increases. If you receive a raise each year, I would suggest increasing your mortgage payment by that amount, unless you require the money elsewhere. This will have the same affect as the above scenarios. This year I received a raise that was equivalent to just over $2000. I divided this by 26 (this is the # of payments I make per year as I pay bi-weekly) and increased each payment by $79.18. This will shave a chuck of payments in the long run.
   
   
6. Increase your payment to the most you can afford. If you can afford to pay an extra $5 of $50 per payment, do so! I can’t put it any other way.

Here is a very interesting concept that a friend has introduced me to. I’m about half way through the book and really like the idea and what I’ve seen so far.

Craig Romero is the author of “Mortgage Cycling Revealed”. Craig is a mortgage expert and reveals how to pay off your mortgage in less than 10 years using his Mortgage Cycling process. Click here to learn more.

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Sell on eBay

If you haven’t registered for eBay, it’s well worth it! I’ve had a few ID’s since eBay was born and have sold and profited from selling all kinds of items such as posters, cans of spaghetti, watches, used cologne, books, coupons/gift certificates, clothing, ebooks and I’ve even had a few Mystery Auctions! If you have something that you think no one would buy, think again! Try selling it on eBay, registration is free. Click here to register for an ebay account or click here to check out eBay.

I would start small by listing some items around the house that you don’t need anymore. This may be cloths that don’t fit, books, movies, cd’s or just about anything you can think of. This will help you to learn more about eBay. Before you post any auctions make sure you read and understand eBay fees and PayPal (if applicable). To find out more about PayPal click here.

If you have a knack for spotting a great deal at yard sales, this could be a very profitable venture for you. A close friend of my wife’s cousin does this and makes a full time income from eBay. She goes around to yard sales, estate sales or auctions and store closures to get her inventory that she resells on eBay. Her income is between $60,000 - $80,000 USD per year. The most I’ve made in a month is $700 and that was putting in about 4-5hrs a week. I usually average a couple hundred dollars when I’m actively selling on ebay. I will use eBay a few months a year because I gather up items to sell and then list a bunch of auctions around the same time. For example, I collected about 30 items between January and March of this year and sold them in April.

I would definitely recommend selling on eBay to make some extra money! I will post more about eBay on and off through out this blog. This is just the starter. Good Luck.