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	"Fast Track" The Equity In Your House How $75 per month can save you thousands Most people would agree that the quicker you increase the amount of equity you have in your house, the better your financial picture becomes. Increased equity means you are closer to paying off your house, allows you room to borrow (if necessary) against that equity, and strengthens your net worth. Most people agree, but many do not know how to get to that position of increased equity. To "go with the flow" of a 30 year mortgage--paying it as it is structured by the mortgage company--means that equity growth will be very slow at best. Take the following example of a 30 year mortgage at 8.00% APR with an initial loan amount of $100,000. End of Year # Total to Principal Total to Interest Balance 1 835 7970 99165 5 4930 39096 95070 10 12275 75776 87725 15 23218 108859 76782 20 39522 136581 60478 25 63812 156317 36188 30 100000 164155 0 Note that after 20 years of payments--2/3rds of the mortgage term--you still owe over 60% of the original mortgage amount. At 25 years, you still owe over 36%! As a contrast, watch what happens to your balance (and thus, your equity) with an additional $75 per month added to your payment and applied to the principal. End of Year # Total to Principal Total to Interest Balance 1 1769 7936 98231 5 10441 38065 89559 10 25996 71055 74004 15 49171 96406 50829 20 83699 110405 16301 25 PAID OFF PAID OFF PAID OFF 30 PAID OFF PAID OFF PAID OFF The mortgage is paid in full in 21 years and 10 months. Even more important, look at the difference in the balance at the end of 15 years. The $75 per month extra that you have paid for 15 years ($13,500 in total extra payments) has bought you $25,923 in additional equity! Figures deemed reliable but not guaranteed. Consult your mortgage company to make certain that they will accept additional principal payments. OKAY...it makes sense. But where do we get the extra $75 per month?
Related Topics
Refinancing your house
Your household budget
	RECOMMENDED READING
	Mortgage-Free! : Radical Strategies for Home Ownership by Rob Roy, Robert L. Roy
	How to Save Thousands of Dollars on Your Home Mortgage by Randy Johnson
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