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Payoff Your Mortgage Faster
How to Pay Off Your Mortgage Faster
Making mortgage payments over the next 15 to 30 years may seem like a daunting task, but you can breathe easy knowing there are numerous ways to pay off your home loan early. All it takes is a little planning ahead, knowing your budget and putting a payment strategy into motion. PrimeLending can help.
Paying off your mortgage can be very beneficial over the long-term. Not only will your home loan be off the books quicker than expected, but you can end up paying thousands less in interest.
If you’re ready to get started, here are tips on how to pay off your mortgage faster:
Make one extra payment each year
If you set aside a certain amount of money each month, you can save enough to make one additional payment each year that can put quite a dent in your loan. How much to save every month is up to you. You can choose a set number (like $100) or calculate how much you would need to equal an extra mortgage payment of the same amount. Make sure to apply the payment to the principal amount.
Round up your payments
Is your monthly mortgage payment $1,257? Probably not, but whatever your payment amount is each month, you can round up and apply the extra money to your principal balance. So in this instance, if you pay an additional $43 toward your loan, that would mean you’re paying more than $500 toward your principal balance every year.
If you pay half of your monthly payment every two weeks, you’ll actually be making an additional payment to your balance by year’s end. Since there are 52 weeks in a year, half payments every two weeks will total 13 full payments by the end of the year instead of 12. This limits the impact it will have on your budget and helps you cut down your total mortgage amount faster.
Just make sure your lender allows for biweekly payments. Some lenders don’t allow it because they’ll lose out on interest, so you’ll want to ensure it’s possible before settling on this path.
Refinance your mortgage
If you plan on staying in your home for the foreseeable future, a refinance could help you pay off your mortgage faster. How? You’ll have to pay attention to mortgage interest rates and strike when rates are low enough to make it worthwhile for you — like a full percentage point lower than your current rate. You can also decide to refinance for a shorter term, or if possible, a shorter term at a lower rate. Just make sure you do the research, have the budget and talk with your PrimeLending loan officer to ensure this will in fact be better for you in the long run. Paying off loans, especially a mortgage, can make a positive impact on your financial situation. Putting together a strategy on how to pay off your mortgage faster is a great way to get ahead of your payments and put aside enough each month where your additional contributions can cut your loan payment length down in years. Just imagine paying off your loan three years sooner than you originally expected.