If you’re ready to pay off your mortgage fast, you’ll need to make the first payment and stay committed to the process. It doesn’t have to be a large sum; just a little extra each month can make a big difference. Once you’ve established that extra amount, you can work on paying off the rest of your mortgage and freeing up the extra money to do other things, such as take vacations.
One of the most common reasons people decide to pay off their mortgage early is to save money on interest payments. Even if you make a small lump sum payment each month, you’ll save thousands over the life of your loan. The interest that you pay on a mortgage is compounded, so if you pay off your mortgage at a faster rate, your payments will be significantly lower.
Another way to pay off your mortgage fast is to pay off any other debts that you may have. Your credit cards and car payments usually carry higher interest rates than your mortgage, so paying them off will lower your total cost of purchasing a home. However, paying off all of your debts before the mortgage is paid off is not a good idea. Besides, it could take months to sell your house and pay off your mortgage.
Another strategy for paying off your mortgage quickly is to make bi-weekly payments. By making two payments a month instead of one, you’ll cut the loan’s amortization period by almost three years. In addition, you’ll make extra payments every year, which will help you to become mortgage-free sooner.
You can also choose to refinance your mortgage. This can reduce your payments, reduce interest rates, and build more equity. Refinancing to a 15-year loan will save you hundreds of thousands of dollars in interest. Moreover, the interest rate on a 15-year loan is less than that on a 30-year loan. The lower interest rate will result in huge savings over the life of the loan.
Another way to pay off your mortgage quickly is to take advantage of statement credits. Statement credits are free money that you can use to make extra mortgage payments. For example, if you spent $150 on groceries and paid $50 for gas each month, you would get $625 cash back. By using your statement credits for these purposes, you would knock off three years of your mortgage in less than three years. This money will also be tax-deductible.
You may also be able to get extra payments from your bank. These extra payments can be made monthly or once a year. However, these payments should be credited to the principle and not to your future monthly payments. However, it is best to talk to your lender to find out how to proceed in this regard.