How To Pay Off Your Mortgage Faster
There are many ways to do this, and some are easier than you might think.
1. Make extra mortgage payments
Make an extra mortgage payment every quarter.
This consistent act can ensure you pay off your mortgage years sooner and save thousands of dollars in interest.
Round up your monthly payment to the next $100.
If your payment is $947.63, pay $1000.00.
Biweekly payments can ensure that you make one full extra payment each year.
Every two weeks you would make half a mortgage payment, equaling 26 half payments. In a year that will equal 13 full payments. It may not seem like a lot, but depending on the terms of your loan, it could shave several years off your loan, saving you a significant amount of money in interest.
Budget for a little extra each month.
Find ways to free up some money each month and add that money to your monthly payment. There are many websites and apps to help you get creative with your budget and savings plan. It’s your money, you tell it where to go!
It is important to include a note with your extra payments that you want it applied to the principal balance, not to the next month’s regularly scheduled payment.
Also, check with your mortgage company to see what their rules are regarding extra payments and early payoffs. Some have prepayment penalties or limits on when extra payments can be made.
2. Refinance your existing mortgage
If you can refinance into a lower interest rate and a shorter mortgage term, you can pay off your mortgage years sooner and save a bundle of money in interest charges.
If you do not want to go through the process of refinancing and you don’t want to spend the money on closing costs, you can treat your existing loan as a shorter-term mortgage. If your interest rate is already low, then consider making your payments as if your loan is a 15-year mortgage instead of a 20 or 30 year mortgage. You could own your home out right in half the time and save a lot of money in the process.