Five Ways To Pay off Your Mortgage Faster - If you are in a financial position where you are able top pay off your mortgage quickly without sacrificing other aspects of your life, there are a few ways to accomplish this. Seek advice from a trusted mortgage advisor, to see what you can and cannot do. Here are a few of the most popular options.
1. Increase your payment schedule.
2. Make lump sum payments.
3. Shorten the time frame of your loan.
4. Increase your payments.
5. Refinance at a lower interest rate, but pay the same amount each month.
Applying any tax returns you receive towards your mortgage balance is a great way to quickly pay your loan down.
You can pay off your mortgage quicker by signing up for a biweekly or accelerated mortgage payment program. This will allow you to make 1 extra payment per year and will end up saving you thousands of dollars in mortgage interest while cutting years off of your loan. These programs are most beneficial on a 30 year mortgage and you can cut up to 8 or 9 years off of your loan by getting on a bi-weekly or equity accelerated mortgage program. These programs will not only help you save a lot of money and cut the term of your loan down but they will also help you build equity into your home faster and lower your effective rate.
Payments on Interest Only loans build no equity. One way to help pay off the mortgage quickly is to put the savings from the interest only payments into an bank account or other investment that earns a higher rate of return than your mortgage interest rate.
To pay off your loan quicker you can make extra principal payments on your loan each year. You can do this monthly (which is the most benenficial) or you can do it bi-monthly, once per quarter, every 6 months or just 1 time per year. There are some people who apply their income tax return each year to their mortgage to pay it down and pay it off quicker. Others make extra payments every time their bonus comes in from work each quarter and yet some just make a $25, $50, or $100 extra payment to their mortgage each month so that they will have their home mortgage loan paid off faster.
If you decide to go with a bi-weekly payment make sure to ask when the payment is posted as many mortgage companies will post the payment only after a full payment is submitted.
They may also charge you a fee to do a biweekly mortgage payment so ask your mortgage professional for all of your options.
Just making that one extra payment a year on a 30 year loan can, in most cases take 10 years off the life of the loan.
Making a 13th payment towards principal reduction every year shortens a 30-year fixed rate mortgage by about 5 years. If the monthly payments are set up to include the escrows of homeowner insurance payments and property tax, then depending on the amount of the escrows, the homeowner can pay off a 30-year mortgage even sooner. One should always check the mortgage statements to ensure that the extra payment is applied to pay down the principal, as some banks would to apply the extra payment towards the next payment due and simply not bill the homeowner for the next month.
Refinancing into a 15 year loan will force you to make higher payments, however it will also force you to payoff your house faster.
One of the easiest ways to make an additional payment each year is to make each payment for 1/12 more than your minimum payment amount. In other words if your scheduled principal and interest payment is $1,000, make a payment of $1,083 each month, and request that your mortgage company apply the overpayment directly to your principal. For many families this is much easier to swallow than coming up with an additional $1,000 in one lump sum. The important part is that the end result is paying off your mortgage roughly 8 years faster than if you just made your minimum payment amount.
How to payoff your mortgage faster! - The goal for most homeowners is to be free and clear with their mortgage. Technically the bank or lender owns your home until you have paid them back in full. There are several things that you can do to payoff your mortgage faster.
To pay off your loan faster you can do a number of things. The easiest thing to do is to pay extra on your mortgage payments each month. If you monthly payment is $1,000 and you were to pay $1,100 instead each month, and you were on a 30 year mortgage, you would be capable of paying your mortgage off approximately 7-10 years quicker. So pay more money each month on your monthly mortgage payment, even if it is only $25 or $50 per month, this can help save you quite a bit of money in mortgage interest and cut years off of your mortgage loan.
If your interest rate is higher than the current market rates, refinancing may get you a lower rate so you can pay more principal off each month.
Making biweekly payments on the mortgage is also another way that you can payoff your mortgage loan sooner.
If you can afford higher monthly payments, you can refinance the current mortgage with a shorter term loan, such as from a 30 years mortgage to a 20 years loan.
If you receive a tax return, consider applying a portion of your return towards your mortgage.