Posted by Jaymie Tarshis on 9:40 AM with 7 comments
Did you know that more than 20 million Americans own their home outright? That means, you can do it too. After all, isn't the end goal for everyone to get out of debt as fast as possible?
However, paying off your mortgage faster is a lot easier said than done. That's why it's about creating good habits and starting with small changes. Eventually, those little changes will catch up to you and you'll start to see a big difference in your loan amount. Here are three tips that we suggest to get you going if you are determined to pay your mortgage off faster:
Start with a Dollar
No, seriously. Start by adding an extra dollar to each month's mortgage payment. Each month, increase your payment by $1. For example, pay $900 the first month, $901 the second month, and so on. For a 30-month, $900 per month mortgage with a 5% fixed interest rate on a loan of $150,000, you could reduce the term of the mortgage by almost six years.
Keep in mind that anything you pay each month over your monthly mortgage payment goes directly towards your principal and the smaller it gets the lower the interest you pay.
Pay a little more.
Feel comfortable doing a little more? Start with where you feel comfortable. Maybe that's an extra $200 a month or maybe it's an extra $20. Every little bit makes a difference. One trick we suggest to start if your budget is really tight is to just round your payment up each month. For example, if your monthly mortgage payment is $1271, round it to $1300. Or even to $1280.
Switch to Biweekly Payments
Since there are 52 weeks in a year and 12 months, if you pay half your mortgage payment every other week you'll end up making 26 half payments which is also equal to 12 full months at the end of the year. This is a full extra payment and for homeowners that already get paid biweekly, this is a great option. Check with your lender or bank to see if they offer biweekly payment plan options.
Did you find these tips helpful? Please leave us a comment below and let us know what you thought or of any other tips you have used to pay off your mortgage faster!