Can you think of anything better for your finances than paying off your mortgage early? As one of your largest debts and monthly payments, eliminating it would free up cash and give you additional peace of mind.
If you’re interested in going down this path, you need a plan of action. You need to know the steps you can take to make progress, as well as how soon you’d like to be mortgage-free.
Here are five tips to consider if you’re interested in paying off your mortgage early:
1. Make bi-weekly payments
It may not sound like it will do much, but it’s a big step in the right direction. By making 26 half-month payments each year, you’re also making 13 monthly payments. Since that’s one more than you usually make, you’re speeding up the time to pay off.
2. Make a lump sum payment
Maybe you do this once or twice a year. Or perhaps it only comes about every other year. Regardless of your approach, a lump sum payment can go a long way in helping you pay off your mortgage early.
Review your finances in search of money that will allow you to do this. From a work bonus to a tax refund, there are opportunities out there. When you have the money to make a lump sum payment, carefully consider doing so.
3. Pay extra toward principal
For example, if your total monthly payment is $1,450, consider putting an additional $50 toward the principal balance. This increases your payment to an even $1,500. Over 12 months, this is an additional $600.
4. Refinance your mortgage
Maybe you purchased your home with a 30-year mortgage. And maybe you have 25 years remaining on the loan. That’s a long time.
If your financial circumstances have changed for the better, refinancing to a shorter term. Even if it increases your monthly payment, you’ll more than make up for it in the long run. That’s especially true if you’re able to secure a new loan at a lower interest rate.
5. Get rid of private mortgage insurance
Buying a home without a 20 percent down payment generally results in private mortgage insurance. However, you don’t have to pay this for the life of your loan. You can get rid of it after obtaining 20 percent equity. At that point, contact your lender to discuss the steps toward removing private mortgage insurance.
You don’t have to implement all of these tips. Even if you only take advantage of one it can go a long way in helping you reduce the amount of time you’re paying on your mortgage. When you finally reach a zero balance, you’ll look back and realize that it was well worth the financial sacrifice.
Do you have any other tips for paying off your mortgage early?
Related Posts :The Benefits of a Fixed Rate Mortgage
Should You Buy a Home When Mortgage Rates are High?
Do You Need to Find a Home Before Applying for a Mortgage?
Avoid These Mortgage Application Mistakes
A Stronger Mortgage Application Gives You More Negotiating Power