How to Pay Off Your Mortgage Quicker – 8 Ways

In order to teach you how to pay off your mortgage quicker, this guide will offer eight useful tips and strategies. The basic idea behind paying a mortgage early is fairly simple: send as much extra money to be applied to the personal balance as you can.

By doing this, you will be speeding up the payment process, resulting in its earlier conclusion. Of course, this will diminish the amount of money you will have every month for extraordinary expenses. However, this sacrifice will result in being debt-free earlier. At the same time, it entails finally being the proud and official owner of a home.

Here are some effective ways in which you can pay off your mortgage sooner than you might think.

the word mortgage on a green calculator placed on a desk

1. Make Bi-Weekly Payments

If you want to know how to pay off your mortgage earlier, making bi-weekly payments is a great method to try. Because there are 13 weeks in each quarter instead of 12, and there are 52 weeks in a year instead of 48, making bi-weekly payments allows you to complete a full extra payment each year.

2. Round Up Your Payments

If you don’t have too much extra money every month, a useful tip on how to pay off your mortgage is rounding up your payments. By adding a few dollars to each payment and reaching a round number, you will slowly but surely speed up your payment process. It’s important to note that these few extra dollars should go toward the payment of your main balance.

3. Make an Extra Payment Each Year

Some mortgage lenders do not allow bi-weekly payments. If this is the case with yours, ask if you can make an extra payment each year directly. In order to ensure you will have enough to make the extra payment, it can be a good idea to save up a twelfth of a full payment each month. After 12 months of doing this, you will have an extra payment ready to be sent.

4. Get Rid of Your Private Mortgage Insurance

If you are wondering how to pay off your mortgage not only faster but also at a discount, you will be pleased to know you can cancel your private mortgage insurance. This is an added charge that lenders require from anyone who obtains a home loan with a down payment of less than 20 percent. The good news is that this insurance can be canceled as soon as a mortgage balance is paid down to 80 percent of the original property value.

5. Set a Target Payoff Date Using a Mortgage Calculator

If you want to know how to pay off your mortgage by a certain date, it’s always a very good idea to use a mortgage calculator to know exactly how much you have to add to each payment. As always, make sure those extra dollars go to paying down your principal balance.

6. Refinance

Without a doubt, one of the most popular ways to pay off a mortgage quicker is to refinance for a shorter term or at a lower interest rate (or, even better, both). However, because refinancing is expensive, you need to be sure it will work to your advantage before taking the step. In order to be sure, you need to be vigilant of interest rates falling over one percent below what you’re currently paying.

a drawing of a house with a tree next to it and a symbolic pile of cash coming out of a drawer

7. Add an Extra Amount Each Month

Even though it may be the most obvious way to pay off a mortgage quicker, adding a bit extra each month is remarkably effective. Despite how much you add, if this is done continuously and rigorously month to month, the money will accumulate, bringing you closer to your goal. Be sure to put this extra money toward paying down your principal balance.

8. Use Your Windfalls

Even though most people pay their mortgages slowly and steadily, there is no law that prohibits you from making a big payment every once in a while. If you receive a large amount of money you weren’t counting on, it would be wise to put a big part of it towards an early payment of your mortgage.

How to Pay Off Your Mortgage on Time

1: Through Savings

If you want to know how to pay off your mortgage early, it’s safe to assume that you have an income that will allow you to do begin chipping away at your debt. Besides this extra inflow of money, it’s a great idea to have some savings. Ideally, these savings should amount to three to six months of your regular living expenses.

2: Through Fixed-Rate and Adjustable-Rate Payments

There are two basic types of mortgage payments: fixed-rate and adjustable-rate. Fixed-rate payments are divided between paying the debt and its added interest. The interesting part is that, initially, most of the payment goes to the interest and a proportionally inferior part goes to the debt.

However, this situation reverses as payments are made. For that reason, it’s a good idea to pay down your principal balance as quickly as possible, resulting in less accumulated interests and a faster conclusion of the payment process.

An adjustable-rate mortgage payment works differently: because it gets recalculated with each extra payment, the loan itself stays the same. Even though this prevents the term from decreasing, each extra payment lowers the interest on the remaining mortgage balance. This, of course, results in a faster conclusion of the mortgage payment process.

Summing It Up

If you read through this guide on how to pay off your mortgage quicker, you know there are various strategies you can use to get to your goal. Hopefully, you can apply one (or various) of them in order to become debtless and free. Even if it takes some time, it will undoubtedly be a huge step forward for you and your family.

Whatever strategy you use, paying your mortgage earlier demands sacrifice and discipline. However, the reward is one of the sweetest ones there are: Being the rightful owner of a home. Do you have any tips for paying off a mortgage faster? Leave a comment!

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