Owning a home is not only a dream come true for many of us, but is an earmark of being an adult who’s ready to build a family. The only thing that’s not so dreamy: a mortgage payment. Spending the majority of our adult lives paying off our home is not an appealing option. Here’s how to pay off your mortgage fast, so you can enjoy the benefits of homeownership without being in debt for many years.
Round Up the Minimum Payment
This particular method is relatively simple, and you probably won’t even miss the extra funds in the budget each month. Depending on how much you’re willing to round up the payment, you could end up paying hundreds extra on your mortgage loan each month. For example, if your mortgage payment is $664.17 you can round up to the payment to $675, which is an extra $10.83 a month. And after 12 months of rounding up your payments, you will have paid nearly $130 extra towards your loan. Every little bit adds up, and whatever you put towards your principal balance will ensure you don’t pay interest on that figure. You could even be really ambitious and bump up your payments by $50 or $100 extra each month, which over the long-term, will help reduce your mortgage payment from 30 years to 15 years.
Make Payments More Often
Instead of making regular payments towards your mortgage once-a-month, consider splitting the payment and paying the loan every two weeks. This strategy has multiple benefits, with the main ones being:
- Making one full extra payment each year, since half of 52 weeks comes out to 13 payments.
- Paying less interest because your payments are applied to your account more often.
Many banks and financial institutions will update your payment schedule if you ask them. However, beware of any extra fees or penalties that might come along with paying your loan balance off early.
Refinance Your Rate
One quick way to cut your mortgage payment time in half is to refinance your loan to a lower interest rate. This could be especially beneficial if you have good credit, or have increased your credit score since buying your house. Shop around at local bank or credit unions (as they tend to have better interest rates than larger banks) and compare what they offer. You may even want to do some comparison shopping online to find the best rate — as long as the companies are reputable, of course. If you’re able to get a better interest rate, don’t stop paying your regular mortgage payment. Keep paying the same figure, and let the interest rate savings build up towards the principal balance.
Pay Off Your Mortgage in Half the Time
Using these strategies separately could knock years off your 30-year mortgage but when combined together might even cut your total payment time in half. Your home is a long-term investment, but that doesn’t mean you should throw away all your money in interest payments. Each of these ideas will only take a few minutes to apply to your monthly payment schedule, but will make a huge difference over the long-term.
Thinking of refinancing your mortgage loan? Visit theimk.com’s Home Refinance Offers page to see how refinancing your mortgage could save you money!