Mortgage Killer Accelerator

Strategy 79 of 107 · new for the five-year plan

Owe an individual? Offer a discounted lump-sum payoff

Depends on people or program rulesFrom a lower cost of the same debtFive-year size: can carry most of it

What it is

If your loan is held by a person (a seller who financed your purchase) or a small private investor, ask whether they would take less than the balance for cash now.

Steps

  1. If your loan is held by a person (a seller who financed your purchase) or a small private investor, ask whether they would take less than the balance for cash now.
  2. Many private holders prefer cash today; get any discount in writing with a release of the lien.
  3. Fund it from assets or a family loan, not new high-cost debt.

Repeat: Once.

Measure: Discount received.

Try it in the calculator Enter its amount in "One-time amount to principal". Add a payoff goal of 5 years to see what is still needed.

Risks

  • A forgiven amount can be taxable as canceled debt; when the seller who financed your purchase reduces it, it may instead count as a lower purchase price. Ask a CPA.
  • Banks and large servicers rarely agree.

Who it fits

Average household, Married couples, Single, Business owners, Grandmas and grandpas (62 and over)

Needs

Mortgage is owed to a person or small private holder

How predictable

Depends on people or program rules (tenants, family, IRS records, lenders)

A worked example (hypothetical, not guaranteed)

Picture a hypothetical household (average household). They owe $300,000 at 6.5% with 30 years left. The required payment is $1,896 a month, and that payment, which comes from income, never changes in this example.

They follow the steps: if your loan is held by a person (a seller who financed your purchase) or a small private investor, ask whether they would take less than the balance for cash now.

Suppose it brings a one-time $100,000 on principal. The loan would be paid off in 13 years 1 month instead of 30 years, saving about $285,309 in interest. To finish in five years, they would still need about $2,017 a month more from other strategies. That is why the five-year sequences stack several at once.

The amount above is chosen only to show the arithmetic. It is not an estimate of what this strategy will produce for anyone. Put real numbers from the fact finder into the calculator.

Sources and more information

Where to get help

Related strategies

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