Paying off your mortgage is one of the largest financial commitments you will make in your life. While it may seem like a daunting task, there are ways to pay it off faster and save thousands of dollars in interest payments. Here are some effective strategies to help you pay off your mortgage faster. Qualifications for first time home buyers can apply for a mortgage to make their dream of owning a home a reality.
- Make bi-weekly payments
One way to pay off your mortgage faster is to make bi-weekly payments instead of monthly payments. This can reduce the term of your mortgage by several years and save you thousands of dollars in interest. When you make bi-weekly payments, you will make 26 payments per year, which is the equivalent of one extra monthly payment. This extra payment will go towards reducing the principal balance of your mortgage, which will ultimately lead to a faster pay off.
- Make extra payments
Another way to pay off your mortgage faster is to make extra payments. You can do this by adding an extra payment each year, or by making a lump sum payment when you have some extra cash on hand. Every extra payment you make will reduce the principal balance of your mortgage and shorten the term of the loan.
- Refinance to a shorter term mortgage
Refinancing your mortgage to a shorter term can help you pay it off faster. For example, if you have a 30-year mortgage, you can refinance to a 15-year mortgage. While the monthly payments may be higher, the overall interest paid will be lower and you will have the mortgage paid off in half the time.
- Consider a cash-out refinance
If you have built up equity in your home, you may be able to use a cash-out refinance to pay off your mortgage faster. A cash-out refinance allows you to refinance your mortgage and take out some of the equity in the form of cash. You can then use this cash to pay off your mortgage faster.
- Make the switch to bi-weekly or bi-monthly payments
You may also be able to switch to bi-weekly or bi-monthly payments if you have an adjustable-rate mortgage. This will result in you making an extra payment each year, which will go towards reducing the principal balance of your mortgage. This extra payment can help you pay off your mortgage faster.
- Round up your payments
Another simple way to pay off your mortgage faster is to round up your payments. For example, if your monthly payment is $1,200, you can round it up to $1,250. This extra $50 will go towards reducing the principal balance of your mortgage, which will ultimately lead to a faster pay off.
- Make payments from your bonus or tax refund
If you receive a bonus or tax refund, consider using it to make extra payments towards your mortgage. This extra payment will reduce the principal balance of your mortgage and shorten the term of the loan.
- Set up automatic payments
Setting up automatic payments can help you stay on track and make sure you never miss a payment. You can set up automatic payments to come directly from your checking or savings account each month. This will ensure that you are making regular payments towards your mortgage and paying it off faster.
- Consider an interest-only mortgage
If you are looking for a more flexible option, you may want to consider an interest-only mortgage. With an interest-only mortgage, you only pay the interest on the loan for a certain period of time. This can make your monthly payments lower, allowing you to put extra money towards paying off your mortgage faster.