For many people, owning their home outright and no longer being saddled with a huge mortgage payment every month is a worthwhile goal. Without a mortgage, you will have extra money for savings, investments, travel, or whatever you choose to prioritize. Paying your mortgage off early isn't necessarily as daunting as you may think, either. Here are four ideas for paying your mortgage off early:
Pay A Little Extra Each Month
Use a mortgage calculator to see how paying just a little extra each month will affect your loan, and you may be pleasantly surprised. Paying a bit extra means more money will be applied to the principal of your loan each month instead of just the interest, potentially shaving years off your loan. At a minimum, round up your monthly payment amount. For example, if your monthly mortgage is $1354, get in the habit of paying $1400 every month. If you can afford to pay more, then do it.
Refinance Your Loan
It's always wise to check with your bank about refinance home loan options from time to time. Depending on your unique circumstances, you may be able to get a lower interest payment which can dramatically lower how much you pay overall, as well as lowering your monthly payments.
A great idea if your payments are lowered after a refinance is to continue paying the original amount -- you are already used to paying this, and the extra money toward your principal will help you pay off your mortgage in record time.
Apply Any Unexpected Money to Your Loan
Get into the mindset of seeing unexpected or bonus money as a way to reach your goal of being mortgage-free as soon as possible. This means applying work bonuses, unexpectedly large tax refunds, inheritance money, etc. to your mortgage in order to power through the pay-off process.
Increase Your Payment With Your Income
Every time you get a raise, try increasing your mortgage payment by the same percentage instead of living more extravagantly. It's not really a sacrifice since you are already accustomed to living on your former salary. Just stay focused on the end goal and remember eventually your mortgage will be free-and-clear, and you will have way more extra money to enjoy every month.
Paying your mortgage off early does require discipline, but it can be done. By following these tips you will soon be on the path to a mortgage-free life.
A few years ago, I found myself in a tough spot. I was completely out of money, and my expenses kept piling up. I knew that if I didn't turn things around, I would be declaring bankruptcy for my business. To ward off financial disaster, I decided to invest a little time into learning how to budget. I made a few simple changes, including eating out less, paying attention to fines and fees, and avoiding excessive shopping trips. You wouldn't believe how quickly things changed. This blog is designed to teach beginners how to shape their financial future, so that you don't have to worry.