A 30 year mortgage can have a negative effect on you both financially and psychologically. In some cases, it may even have an emotional impact on you. Did you know that you could end up paying an extra $100,000 over the course of a 30 year mortgage on a $200,000 loan than you would if you had the same loan spread out over 15 years? That is why many homeowners try to pay off their mortgage much earlier than scheduled. If you want to do this, here are some tips to help you make that happen.
Apply Lump Sums to Your Mortgage Payments
Do you get sizeable Christmas bonuses each year? Did you recently come into a significant inheritance? By applying these and other large lump sums to your mortgage when you get them, you can significantly reduce the amount of time that you pay on your mortgage loan. If this is money that you were not counting on anyways, you won’t miss it so why not just apply it to your house payment?
Pay More Each Month
If you have any money left over at the end of each month, one way to pay off your mortgage early is to apply that extra money to your mortgage. Be sure to pay with a separate check and contact your mortgage lender to let them know about the extra payment. You might not think a little bit of extra money each month will make a difference, but it can knock down the interest significantly which reduces the amount of time it will take to pay off your loan.
Consider Refinancing
Are you in a much better credit situation than you were when you first bought your home? If so, you can probably qualify for better mortgage rates than you have right now. You will have to pay some closing costs when you refinance, but a lower rate could save you thousands in the long run. Crunch some numbers and find out what rate you qualify for to see if refinancing is a good choice for you. Find the best current mortgage rates where you live here.
Making a Mortgage Payment Every 2 Weeks
If your mortgage lender will accept it, paying half of your mortgage payment every two weeks is a good idea to pay off your mortgage early. For one thing, this helps to stop the interest from accruing so much each month. But doing this also helps you get an extra mortgage payment in each year. That’s because you will be making 13 months of payments rather than 12 because there are 52 weeks (or 26 2-week periods) in a year.
These are just a few of the things you can do to get out from under your mortgage early. Once you see that balance begin to drop, you will start to feel a huge weight being lifted off of your shoulders and you may even start feeling better mentally and physically.
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