Four Ways to Pay Off Your Mortgage Sooner

Paying off your mortgage sooner than scheduled is one way to save thousands of dollars over the life of the loan. But it is also a great way to save you a ton of stress of a house payment hanging over your head as you get older. With some careful planning and thought, you can pay off your home mortgage in the smartest and most financially-savvy way possible.

1. Make Biweekly Payments

One of the best ways to pay off your mortgage faster without spending more money is by making a payment every two weeks instead of every month. Cut your monthly payment in half and pay one half ever other week. Although you are paying the same amount each month, you are stopping the interest from accruing as much as if you just send in your payment once a month. Also, you are paying 13 payments each year instead of the normal 12 if you pay biweekly.

Example: If you have a $100,000 mortgage scheduled for 30 years with a 7 percent interest rate, you could pay off the loan six years sooner and save almost $35,000 by using the biweekly payment method.

2. Make Lump Sum Payment with Bonus Money

If your mortgage agreement allows you to make large periodic payments, apply any large amounts of money you get to your mortgage. This can include Christmas bonuses, inheritances, lottery winnings, tax refunds or any other large sum of money. Depending on how much extra money you apply to your mortgage, you could save thousands in the long run.

3. Refinance with a Lower Interest Rate

If your credit is better than when you bought your home and if interest rates are low, consider refinancing your home. When you get a lower interest rate, you won't be paying as much in total over the life of the mortgage. If your financial situation allows it, opt for a shorter term mortgage rather than a 30-year one. You may need to pay a little more each month, but you will save thousands in interest and be rid of your house payment many years sooner.

4. Send More Money Each Month

If you have had your mortgage for several years, there is a good chance that you make more money now than you did when you signed the papers. Take some extra money each month from your paycheck and apply it to your mortgage. Even if it is only $50 or $100, sending this extra money in every month will ensure that your mortgage gets paid off sooner than you think!

Many people in America desire to be debt-free. A mortgage is typically the largest debt that a person or a household has. As a result, it may be a daunting bill that seems like it will never be paid off. Use the tips above to own your home outright while saving money, too!