If you’re like most Americans, your mortgage is probably your biggest monthly expense. So, it’s no wonder that you may be looking for ways to pay it off early and save on interest.
You may want financial stability, use the money for something else, or even stop paying interest. Whatever the reason, you can advance mortgage payments to pay it off sooner.
Paying your mortgage before the estimated time can be a great success to get rid of debts, especially those that have to do with real estate, which are usually at least 10 years. The reality is that advancing payments is not an easy thing either: there is a lot of money at stake. However, it is also not impossible to do so.
How to pay off your mortgage early: Sick of being in debt?
While there’s no one-size-fits-all solution, there are a few things you can do to speed up the process.
1. Refinance your mortgage
This is particularly recommended at times when interest rates drop. You should approach your lender’s advisors to refinance your mortgage, which will help you pay off your debt early.
2. Pay larger amounts
If you pay the amounts that were established in the mortgage agreement, you will not be able to lower the interest, that is, it is like with a credit card, if you focus on paying the minimum, your debt will be extended until the agreed time.
If what you want is to advance, then what you should do is pay monthly installments above your minimum. With this you will be able to attack the interests and that the balance goes down. You have to specify to your lender that all your additional payments are going to be applied to the principal of the loan, not to the interest. If you do not make this observation, the lender could apply these payments to the next monthly installments, and then you will not see your balance reduce in less time.
3. Make an extra payment per year
If you find it difficult to make monthly payments on your mortgage, then what you can do is make an extra payment per year. In other words, instead of paying 12 monthly payments during a year, you pay 13. This will help you reduce your balance. You must also notify the lender that this payment is for principal.
4. Round up your mortgage payments
Experts recommend that when calculating your mortgage payments, it’s always a good idea to round up to the next higher number. For example, if it’s $743, then you pay $800 per month, this will also help you advance your outstanding balance.
5. Use extras to pay the mortgage
Any extra money you receive, whether it is a job performance bonus, that you collect money that you had not been paid, etc., pay it to your mortgage. This is money that you do not have included in your common budget and that will give you benefits if you add it to your mortgage.
In conclusion, following the above steps can help you pay off your mortgage early. You need to be disciplined and have a plan. You also need to make extra payments whenever you can. Stay focused on your goal and don’t give up. With perseverance, you can be mortgage free in no time.