Your mortgage is a debt that follows you around a long time. It can take decades to fully pay off your mortgage and finally own your home. If you’re like most people, you probably want to pay your mortgage off faster. By paying your mortgage off faster you will have one less bill to worry about in the future, and you’ll have some extra money to spend in your later years. Paying your mortgage off isn’t always easy, but there are a few ways to go about it. Below are some methods you can try to pay your mortgage off faster. See if any of these options work for you.
1. Bi-weekly Payments - For most mortgages, you make a payment every month. One strategy to consider is making payments twice a month, or every two weeks. So instead of making 12 payments per year, you would actually be making 26. For example, lets say you have a 300,000 dollar mortgage with a 3 percent interest rate over 25 years. This will cost you about 125,920 in interest if you make monthly payments. However, if you increase your payments to bi-weekly, you will pay your mortgage off 3 years faster and save over 16,000 in interest.
2. Round up - When making your mortgage payment, consider rounding up the amount you owe. Every single dollar counts when it comes to your mortgage, so even just a few dollars extra each month will pay off in the long run. For example, if you owe 536 every two weeks, consider rounding up to 600. This extra 64 will make a huge difference, and you will probably not even notice a huge difference in your monthly budget. If you get a raise at work, consider spending that money on your mortgage payment instead of an increase in lifestyle.
3. Put “Found” Money To Use – Every once in a while, we come in to unexpected money. Whether it’s from a prize, a bonus at work, or a birthday check, extra money should be put to use on your mortgage payments. Add any extra money you get that month to your payment, and it will certainly help you out. Like we said, every dollar will help, even if it doesn’t feel like it. If you make it a habit of adding your extra money to your payments, you’ll be very happy when your mortgage is suddenly paid off several years early.
4. Lump Sum Anniversary Payments – A lot of banks will allow you to make an extra loan payment each year that goes directly to your principle. If you can do this, you should definitely take advantage of it. Even if it is just a little bit, chipping away at your loan is always a good thing, especially when it is interest free.
5. Stay Informed - Last but not least, stay up to date on your loan. It can be easy once you have your loan to just set up automatic payments and forget about it. But if you do this, you could miss out on your bank changing its interest rates or modifying their program. State current as to what your bank is doing and see if there are any new deals you can take advantage of. By doing so, you could end up saving yourself a lot of money.
It’s not easy paying off your mortgage faster, but it’s certainly worth it. You don’t want to be saddled with debt for any longer than you have to be. Take a look at your monthly budget and see where you can squeeze out a few extra dollars. By adding this amount to your bi-weekly payments, along with any other money you come into, you can save yourself thousands of dollars in interest, along with giving yourself a few more years of being stress free. Those two things are more than enough reasons to make the effort to pay your mortgage off faster.