When you look at your mortgage balance it might seem like an impossible dream, but it really is possible to pay off your mortgage early…saving not only money but giving you peace of mind.
How to pay your home off faster
Before trying any of the following strategies, contact your lender and ask them the best way to follow your plan. Some lenders may agree to biweekly payments, while others may not.
In some cases, lenders have a caveat against early payoffs built into their loans, so make sure your early payment strategy won’t incur a penalty.
1. Refinance
First, you can refinance to a 15-year mortgage. Rates tend to be lower and the shorter time frame means you’ll be paying your home off faster.
While this might seem like an easy solution, it’s important to understand all of the pros and cons to know if it’s right for you.
Your payments will be higher and you’ll also have to add in the cost of doing the refinance, assuming you don’t pay cash for the closing costs.
2. Extra mortgage payment
Another option is to make an extra mortgage payment every year.
Known as bi-weekly payments, the idea is to pay half of your regular mortgage payment every two weeks instead of a full one every month.
At the end of the year, you will have made one extra mortgage payment per year.
This one tactic will help you to pay off your mortgage in 22 years as opposed to 30, saving you tens of thousands in interest payments.
If your mortgage company offers this option, they may do so with a fee tacked on top. Don’t bite…instead, do it yourself by dividing your mortgage into 12 payments and adding the extra onto your regular monthly payment instead.
3. Round up
If money is just too tight for either of these strategies, just round up your mortgage payment to the next highest number. For example, if you pay $950 per month, make it an even $1,000 dollars.
4. Downsize
If you’d rather not wait years to pay your mortgage down, you could decide to sell it, then use the equity you’ve accumulated to purchase another less expensive home.
While this might seem radical, in reality, it is a practical way to get out of your mortgage debt fast.
If you don’t have enough after selling your home to buy another outright, you will have a sizeable chunk to put down on your new home, with a smaller mortgage than what you had before.
5. Boost your income
Get a second (or another) job, build your own business…there are a lot of ways you can increase your income.
To really boost your repayment efforts, combine the power of slashing all of your non-mortgage debt entirely – including any car payments – with these strategies…using the extra money to really dig into your mortgage payment.
Note: Whichever method you choose, don’t forget to notify your mortgage company that you want the extra money applied to the principal balance of your home loan.
Keep moving forward
Put together a dream board or other visual reminder of what your life will look like when you’re not only free of consumer debt, but you own your home mortgage free.
This will help you remember your goals when times get tough and life happens.
Finally, whatever you do, be kind to yourself…when you slip away from your goals just dust yourself off, get back on track and keep working your plan.
You will get there if you don’t give up.
