“How to Pay Off Your Mortgage in Five Years” by Clayton and Natali Morris centers around performing a lot of math. If you don’t enjoy math, this may not be the book for you.
However, they present a good argument for how to pay off your mortgage quickly. If you are a financially disciplined person, their technique could work for you.
The essential part of their plan states that your mortgage interest derives from your current loan balance. Therefore, if you put a large lump sum towards your principal, you can reduce your interest significantly.
1) In this method, you use a home equity line of credit to pay down a large chunk of your mortgage.
2) This will reduce the interest you pay toward your mortgage every month.
3) You then deposit your work paychecks directly into the home equity line of credit. You pay all of your bills through the home equity line of credit.
4) The goal is to spend much less than you deposit into your home equity line of credit. For example, you deposit $10,000/month from your work account. You only spend $7,000.
5) Every month, you pay down your home equity line of credit (in this case, $3,000). If you took out a $40,000 line of credit, it would take roughly three years to pay it back.
Once you get the hang of this method, things will go much quicker. Again, the main point is living below your means and having extra money going toward your line of credit every month.
Can this technique work? It can work very well, but only for highly disciplined people. The rub is that most people hate arithmetic, reading, and writing (the 3 R’s).
Therefore, this method will seem very complex to most people. You must understand how to budget and control your financial destiny—it’s a lot to take in for the average person. This is a super advanced technique for a super advanced investor. Good Luck!
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