I recently read about, and then decided to check out a free service, known as ‘Paying Off Mortgage Help’ (payingoffmortgage.org), which is a part of the ‘Pay Off My Home Loan’ network. The idea behind the network and the site is to help people like me pay off their mortgage by performing a comparitive analysis to determine what would be the best way for them to pay off a mortgage. This is a novel, and much needed service to say the least! The fact that it is completely free (though they do recommend that you make a donation to keep them going), makes it even better!
Looking further into it, I discovered the various metrics they use in addition to the standard mathematical calculations to select your ideal payoff method. The comparison includes
At the moment, there are lots of competing systems and theories for debt management. The most common of these are extra payments on principal (which will ALWAYS help, but may not be the most efficient), bi-weekly payment plans, and software-managed MMA. Each has of these methods has its pros and cons that make it suitable for some, and not recommended for others. What works best is based ENTIRELY on the individuals situation and financial set up. There are tons of factors that can influence what works best for you, including:
Nature and Frequency of income –
This is a biggie that is almost always ignored! How frequently you earn (weekly, bi-weekly, monthly, quarterly, commission based and so on) makes a BIG difference on what would be the best payoff method for you!
Number of Accounts and Loans You Manage –
The larger the number of accounts (checking, savings, money-market) that you manage has a direct impact on how efficiently your money is earning for you. Additionally, the greater the number of loans you have – not the amount – tips the scales in favor of a software-based MMA instead of other methods.
Discretionary Income –
Depending on how much discretionary income you have, and at what times, your ideal method of payoff will vary as well. For example, if you get one big bonus every 6 months, and have very little discretionary income until then, your payoff method should include this crucial information in there. On the other hand, if you make have a sizeable discretionary income, but take a big hit to your cashflow once or twice a year (taxes or restocking), you will need a more flexibble payout method as well.
This is the most obvious one. If you have a difficult time following a plan, or not spending the money you have in hand, it is better to go with something that isn’t entirely based on you sitting down, doing the calculations, and sending in a check.
Another way to easily deal with your mortgage is to find the right mortgage broker for you. Having the right broker will help you to easily deal with all of your finances. You can find independent mortgage people that are reliable and do provide quality services to their clients.
There are a few more things involved, but these are some of the biggies that are usually ignored by every other pay off method and financial counseling. I obviously believe that this is a service worth checking out for everyone looking for help with their debt to determine what their ideal payoff method is! As for me, I’m getting all set up to pay off my mortgage quickly!