A home mortgage is the biggest loan that most people will ever receive in their lives. Having such a mountain of debt often motivates borrowers to try to pay their mortgages off early. If you are one of them, the first thing you need to consider is whether you actually should pay your mortgage off early. You should only do so if you do not have other high-interest loans that you need to pay off first. If you are ready to pay off your mortgage early, then here are some smart tips you can use to make pay it down in a hurry.
Buy a home you can afford
If you wish to start paying your home mortgage off early, it helps a lot when you live in a home you can afford comfortably. One of the biggest mistakes that homebuyers make is buying a home that gives them a monthly mortgage payment that stretches their budget too far. When you are already struggling just to make your monthly payment, paying it off early is a pipe dream. If you are living in a home that is too expensive, you should look into selling your home so that you can get into a house that gives you a smaller loan that you can pay off more quickly.
Make one extra payment per year
An easy way to make sure that you pay off your mortgage quickly is to make one extra payment each year. If you do this, you will also save thousands of dollars in interest rates over the life of your loan. If this plan sounds intimidating, there is an easy way to do it. Simply save a twelfth of a payment each month, and at the end of the year you will have a whole extra payment. Another way you can get in an extra payment each year is to start making biweekly payments on your note. If you pay half of your monthly mortgage every two weeks, it adds up to 13 full payments over the course of a year.
Reduce expenses
Even if you think your budget is stretched too tightly to make extra payments, there are easy ways to find extra money. The best way to do this is to look for ways to cut your expenses. The Home Truths series from UBank shows that there are many ways that homeowners can think of to save money to pay their mortgages off more quickly. When asked how to pay off their mortgages more rapidly, 26 percent of respondents said that doing their own home maintenance and repairs was a great way to save money to pay it off. Also, 32 percent who had two or more extra rooms said that renting out a room would be a good way to earn money to pay off the mortgage.
Refinance
If you are unhappy with how long you are going to be paying off your loan, you should consider refinancing to a shorter-term mortgage. Even if you do not want to shorten the term, you could pay your mortgage off earlier if you refinance to a lower APR. Paying less interest means that you can more quickly pay off the principal.
If you want to pay your mortgage off early, you can find a way to make it happen. These tips will give you a good path to paying it off more quickly so that you can reduce your debt. It may seem like a struggle to give up things like vacations, cars and other luxury items, but there is always a way you can find more money to pay off your debt as fast as possible.
Need help buying or selling a home? Talk to a RE/MAX agent.
