5 Tips on How to Pay Off Your Mortgage Faster
A mortgage payment is by far the most expensive financial obligation many people have every month. And having a mortgage that you pay off is a distant dream for many people.
It will give you emotional security and safety on your most significant financial investment. You must know about how to pay off your mortgage faster.
It is clear that when you have your home fully paid off, then you end up with peace of mind. Paying off your mortgage is quite simple though most of people do not pay off their mortgages in time due to conflicting advice from professionals.
It gives them conflicting ideas, leaving people unaware of where to start when making a payment. There are various methods and strategies on how to pay off your mortgage. But the first step is paying off your mortgage.
Make this as your commitment. This way you can decide you can spend or what sacrifices to make to achieve the goal. With the decision in mind then the payment will turn out a success.
Therefore, speeding up the debt repayment process is called an accelerated debt payoff. It is something key that every individual with debt should know. The fact is that this is always a more natural and faster way to get out of debt.
5 Tips on How to Pay Off Your Mortgage Faster
It does not matter whether all the debt you have is your mortgage, credit card debt, or lines of credit, this mode of payment plan will shorten the amount of time you spend paying your debt as well as you will spend less money in servicing your debt. Here are some tips on how to pay off your mortgage faster.
1. Using the biweekly prepayment method
It is a service that is usually set up after closing. This method requires that you make your mortgage payments every two weeks. In this case, you pay a fee to set it up, and then the loan servicer automatically deducts one-half of the mortgage payment from your checking account every two weeks.
Since there are 26 biweekly periods in a year, you end up making one extra mortgage payment towards the principal. By paying that one additional payment, then you can find that a 30-year loan is cut down to about 23 years. That is, at least you have some seven years earlier payment.
2. Refinance your mortgage
You can choose to refinance from a 30-year mortgage into a 15-year loan. The interest rate on the 15-year loan is slightly better, making the refinance method useful despite the slightly higher loan payment.
Most of the people find this mode of payment more attractive as these other payoffs are always a good trade-off for the increased equity builds up.
However, selecting this method is still again at times tricky because these lock-up into higher payment reduces flexibility especially when the income goes down.
It becomes so much problematic as these higher payments turn into burden making you go back to the more extended loan repayment periods.
More so, you can opt to pick a 20 or a 25-year payoff, where the increase in payment is much lower than with a 15-year mortgage. The better part is still that you are still building up more equity than you would with a 30-year fixed rate.
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3. Paying extra towards the mortgage
You can choose to add payment towards your principal. One benefit that comes with this mode of repayment is that you are not in a lock of a more substantial amount of a fixed loan.
Some people choose to pay every month, but usually, this requires some discipline to ensure that you are making extra payments without skipping other months.
Typically, every extra dollar you pay will reduce your mortgage balance, paying off the mortgage a bit faster. This repayment mode does not push you to more substantial payments; it depends on the money you are obligated to add to your principal.
4. Applying any tax returns towards paying off the mortgage
It is usually an option that many people do not utilize to the maximum. Most people do not prefer using their tax return to pay off the mortgage, but I can assure you that it works great for those who can.
You can devote yourself to making one extra payment a year. You can also apply your tax returns to the principal balance, and you can be sure of paying off the mortgage in half the expected time. It is one of the tips on how to pay off your mortgage faster than most people are not aware of.
5. The use of a Mortgage accelerator program
With this method, you use a home equity line of credit (HELOC). The technique is always good as it enables you to pay off your mortgage without having to change your lifestyle.
The Heloc turns into a checking account that you use for your banking, thus paying off your mortgage faster.
This method will help you to ensure that your mortgage is under ten years. Because you will be paying a little extra every month will help you a great deal to eliminate 15 to 20 years mortgage.
Bonus: Use of the money merges account software
This software is always a planner of all your financial data. It monitors your economic data, such as:
- Income,
- Expenses
- Mortgage balance
- Timeline to pay off the mortgage.
The software gives you the power to see how much money you genuinely spend thus preventing you from overspending. With this, you can cut back on the unnecessities, becoming more disciplined, and therefore paying off your mortgage faster.
Conclusion
Most people with mortgage wonder how they can pay off the mortgage within minimal time. While there is not a magic formula for paying off your mortgage faster, you can do with discipline and consistency.
As time goes by when you commit you will be in surprise at how fast your loan balance goes down.
The above tips will help you know how to pay off your mortgage faster. This way, you can save yourself tons of money in the long run. You just need to implement one of the above strategies. This way, you will start to notice how your mortgage balance is dropping rapidly.
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