No Credit Needed speeds up mortgage payback with micropayments

No Credit Needed, a long-time debt reduction blogging colleague, after having gotten rid of his non-mortgage consumer debt, has been chipping away at the big one: his home mortgage.

He’s on track to pay off his 15-year fixed rate mortgage three years early, and is aiming to get it paid off five years early.

They’re making additional micropayments throughout the month.  These are principal-only payments.  This has two effects:

  • The micropayments reduce the balance immediately.  This means that the interest accrues on a smaller balance, immediately.
  • The next regular payment will include more principal and less interest.  Every payment following an extra principal payment works a little harder than it would otherwise.

So this is a great thing to do, especially if you have an ample emergency fund and have a consistent, well-planned budget.  Any extra money that comes in can be thrown at the debt.

Keep doing what you do, NCN, and we’re praying for a mortgage payback time of less than ten years!

3 thoughts on “No Credit Needed speeds up mortgage payback with micropayments”

  1. Thanks for the link. One clarification. Unlike credit card companies, our mortgage provider only applies payments once per month. This reduces the effectiveness of micro payments a bit, because we don’t get the immediate balance reduction, like we did when paying off our consumer debt. However, we still like the psychological boost associated with attacking our debt “daily” with each financial decision. Be blessed.

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