Purchasing a home is a big decision that comes with an even bigger price tag. On average, most Americans have a 30-year mortgage, which seems like forever. But, what if we told you there are some simple ways that can help you pay off your mortgage quicker than that 30-year plan? You’re in luck because there is! Here are five ways to help pay off your mortgage faster.
Consider Refinancing
There are many reasons why someone may want to refinance their loan. It could be because of lower interest rates, or because you may want a different term. A lower interest rate will help lower your payments and save you in the long run. In addition, a shorter term on your loan will mean your payment may go up, but your mortgage will be paid off faster. Both are great reasons to consider refinancing.
Plan to Make One Extra Payment per Year
One extra payment per year means less time on your loan and less of your money going towards your interest. There are three popular methods to this strategy. The first option includes paying half of your mortgage payment bi-monthly instead of making one payment per month. Similarly, you can make your payment every four weeks, rather than monthly. This results in one extra payment per year over time, but it’s important to speak with your mortgage provider to let them know prior to choosing this route. The other option is making a 13th payment with a lump-sum at the end of year. This can be tough on your budget if you are not prepared, but beneficial in the long run if you have factored that in your budget.
Make Extra Principal Payments
In addition to the above options, you can also consider paying extra money toward your mortgage each month. This doesn’t necessarily have to be every month, but it’s a great idea when you have a little leftover from your monthly budget.
Look into Recasting Your Mortgage
Another option to consider is to recast your mortgage. The difference between recasting your mortgage and refinancing is that you keep your existing loan, but make a lump-sum payment and then work with your lender to adjust your loan term to make it shorter. It’s important to keep in mind though that there are usually fees associated with this, but it is usually only a few hundred dollars.
Make a Lump-sum Payment
Lump-sum payments are another great way to help pay your mortgage off faster. Certain types of loans cannot be recast, so in this case you would just keep your original loan while making additional lump-sum payments when you are able to.
Interested in learning more about how to shorten your mortgage? Visit our website or call a Member Specialist today at 800 – 422 – 5852.
