A home mortgage is a commitment that affects your financial picture for a good portion of your life. It's a big ambition, but paying off your home mortgage even a little bit early can save you thousands of dollars over time. Our real estate agents have put together this list of ways to pay your home off early.
Three Ways to Pay Off Your Home Loan Much Faster
Savvy budgeting and a commitment to "stick to the plan" will serve you well in your quest to pay your home loan off early. When it comes to any big goal like this, adopting a number of small, helpful habits is your best bet. By chipping away at your mortgage payment every month, you'll get closer to your goal.
- Kick In an Extra Payment
Making extra payments to the principal of your home loan adds up. Just one extra payment per year can shave years off your mortgage.
Many people swear by the concept of the biweekly payment: Here, you pay half your regular payment every two weeks instead of the full payment every month. Since there are 52 weeks in a year, this results in an extra full payment annually.
In addition, rounding up your payment can make a noticeable difference as well. When you come across some extra money--like a tax return or a holiday bonus--you always have the option of using it for your mortgage expenses.
- Refinance Your Long-Term Mortgage
When you were searching for a mortgage lender, you probably learned all about Annual Percentage Rate or APR. APR is a measure of how much interest you can expect to pay on your mortgage over time. All other factors being equal, a lower APR is better. Unfortunately, it's often hard to find a truly outstanding APR unless the real estate market is strongly favoring home buyers.
Once you've had your mortgage a year or so, start monitoring the market and keep your eye out for refinancing deals. Refinancing can be a complex process, but doesn't involve many out-of-pocket costs and will cut down on your total mortgage investment going forward. If you find a favorable refinancing loan, there's rarely any reason not to go for it.
- Downsizing Your Home
If you are interested in replacing your large mortgage payments with smaller, more affordable payments, downsizing your home may be the way to go.
By selling your larger home, you may be able to use the profits from that sale to buy a smaller, more affordable home and reduce your overall debt. The smaller the balance on your new home loan, the easier it will be to pay off more quickly.
Contact Cressy & Everett Real Estate for expert help and advice when you're buying or selling your home.