Mortgage Basics - Tip on Budgeting

Read More About Mortgage

What does the word 'mortgage' literally mean?

The word 'mortgage' actually derives from two different languages. The French 'mort' translates to 'dead' and 'gage' comes from Old English and means 'pledge'. So in short, the word 'mortgage' actually translates to a 'pledge until death'. Scary huh? The last I checked, there are not too many things I want to be committed to forever aside from my wife, and that's mostly because I know she is reading this. Love you honey!

All jokes aside... A mortgage really is something that you committed to for a very long time. It often takes some real gusto to figure out how to manage properly to make it work. Some banks are currently offering 40 year terms. Can you imagine how difficult it would be to still make monthly payments of $1,000 when you are nearing 70? I know that thought would scare me to death. It makes me want to follow all of the tips on budgeting I can.

Unlike most other types of loans, your mortgage is often negotiated several times before its paid off. Some people decide to make larger contributions each month to pay it off more quickly. Others just pay the minimum. It's another 'black and white' decision you will have to make when determining how to manage money.

I will explain both sides:

Let's assume you have a 30 year mortgage $250,000 at 5% but decide to make three extra contributions each year that are the equivalent to a regular payment ($1342). You will have paid off your mortgage in just 20 years. With the 'debt stacking' technique, you then put your regular mortgage payment of $1342 into a savings account for the remaining ten years at 5%. You will have saved $212,682 in that amount of time. If you were to include those three extra monthly payments you would have $265,853. If the money was invested at 10% the totals would be $282,322 and $352,902 respectively. Not bad. It pays to debt stack, but check out these other tips on budgeting...

Lets say that you have that same 30 year mortgage of $250,000 at 5% and make the minimum monthly contributions of $1342, no more no less. Rather that using those three extra contributions towards your mortgage you add them to a savings account at 5% for 30 years. How much do you think you will have?

$280,857.

Now imagine you are able to invest that money at 10% for that 30 year period of time. The total would be $728,478.

I highly recommend that you use debt stacking for your high interest loans such as credit cards but let your mortgage be. Pay the minimum and invest what you would like to contribute. The amount of money you would save will blow your mind. By following many of how to manage money tips on budgeting like these on my blog you will increase the chances of actually making money while you pay off your mortgage. Crazy huh?

DID YOU LIKE THIS ARTICLE? SHARE IT WITH FRIENDS!

Article Source: http://depositarticles.com/

You can pay off your debts and save money at the same time! Say goodbye to your boss forever! A blog that will show you the secrets of the wealthy: www.howtomanagemoneytips.com Get a free budget sheet, net worth calculator, tools and more: www.howtomanagemoneytips.com/social.html

Please Rate this Article

Not yet Rated

Click the XML Icon Above to Receive Mortgage Articles Via RSS!

Additional Articles From - Home | Finance | Mortgage

Our other websites
All about SEO
Beauty Tips Forum

	Print This Article
	Post Comment
	Add To Favorites
	Email to Friends
	Ezine Ready

Submit Articles
Member Login
Link Us
Submission Guidelines
Ezine Notifications
Article RSS Feeds
Sitemap

New Stuff
About Us
Developer
Good shopping portal
Link to Us
Contact Us
Privacy Policy
Terms of Service