Paying off your mortgage as fast as possible allows you to build equity in your home while saving money on interest. Not having a mortgage payment can be a good thing if you suffer a job loss or any other unexpected expense. This is because you can use the equity in your home to pay your bills and you don’t have to worry about being foreclosed upon.
Make A Payment Every Two Weeks
The easiest way to pay your mortgage sooner is to make bi-weekly payments. When you make payments twice a month, you make the equivalent of an extra payment each year. Every 12 years that your make an extra monthly payment, you shave an entire year off of your mortgage. The best part is that this won’t impact your budget enough for you to worry about the extra payment being taken out of your bank account.
Opt For A Shorter Loan Term
Typically, a mortgage is paid off over the course of 30 years. However, you have the option of paying off your mortgage in as little as 10 years or less. Although you will be making larger monthly payments, you will be able to pay for your home in a significantly shorter period of time. For those who are worried about having too much debt, this can be a great way to buy the home you want without having the payments linger for several decades.
Put Raises And Other Bonuses Toward Your Mortgage
Over the course of a decade, there is a good chance that you will receive one or more pay raises. Smart homeowners will put the bulk of that raise into extra mortgage payments. This is a smart move because the extra money will go directly toward the principal balance as opposed to interest payments. Making extra payments can also help if you need a break from paying your mortgage. For example, if your mortgage payment was $500, you could use a recent $1,000 bonus to pay your mortgage for the next two months.
Get A Home Loan With A Fixed Rate
Lock in a low interest rate as soon as possible. While variable rate loans can help you qualify for a home loan, having a loan with a fixed rate allows you to lock in a rate that will never go up for as long as you own your home. This means that you will still have a low monthly payment regardless of whether or not interest rates go up in the future.
Paying off your mortgage as soon as possible is a good idea for many reasons. You want to pay as little interest as possible, build equity in an appreciating asset and get rid of a major debt as fast as you can. When you don’t have a mortgage to pay, you can put money toward your retirement or other bills. It gives you the flexibility to do what you want with the money that you work so hard to earn.