A mortgage is one of the largest borrowing events most Americans will ever take on. And even though it's also one of the most valuable and important, the faster you can pay it off, the more money you'll save and the sooner you'll enjoy a debt-free lifestyle.
So, how can you pay off your mortgage painlessly and years early? Here are four great ways.
1. Make Bi-Weekly Payments. Mortgage terms generally require one payment per month. But if you switch to a method of paying half the normal payment every two weeks, you can save big bucks. Because there are 52 weeks in a year, you'll end up making an extra mortgage payment each year without even noticing the difference. The savings could be substantial over the lifetime of a mortgage.
2. Use Windfalls. Most people get some money unexpectedly or out of the ordinary. Whether it's a rebate for a purchase, an end-of-the-year work bonus, or a small lottery win, be determined to put the money toward your mortgage principal. Since the money is outside your normal monthly budget, you won't miss it. If you simply have to have a little fun with surprise money, set aside 10% to play with and put the rest on your mortgage.
3. Refinance the Loan. Refinancing when rates are low is an excellent way to save thousands of dollars and shorten a mortgage term. It may involve some extra legwork since you'll need to have a good credit history and collect the paperwork needed to refinance. But it'll be worth the effort. Many homeowners refinance to a lower payment while still paying off other debt or shortening their terms by several years.
4. Make One Extra Payment. Saving up enough small change to make an extra house payment may take a while. But even if you can make just one extra principal payment each year, you'll save thousands of dollars. Plus, as an added bonus, it's likely to inspire you to find ways to add even more money to your existing payment plan and continue to reap the benefits. Once you successfully make an extra payment, make a new goal to decrease the time you save to make another extra one.
Which of these simple financial hacks will get your mortgage paid off early? It depends on your circumstances and personality style. But by getting started today, you can ensure a more stable and stress-free future for years to come. For more information, contact your local mortgage companies.
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