Being debt free is an appealing thought. Obviously, when it comes to home loans, mortgages, and any other amounts you have on cars or credit cards, it can be a little difficult to remove that debt. If you’re looking to minimize a few years off of your mortgage, follow these tips on how to help pay it off early.
1. Make one extra payment each year
If you come up with extra money whether through a side job, a bonus, or an inheritance, think about putting some of that towards an extra payment during the year. You can choose if you want to make it at the end or beginning of the year, or whenever that extra money came up. Making an extra full payment at some point throughout the year could knock off four years from your loan.
2. Add a little extra to each monthly payment
Maybe you can’t afford an extra full monthly payment, and that’s okay. If smaller more manageable payments are a comfort zone for you, then that can help you, too. To make up for added interest and shave off a couple years, adding an extra $75-$100 to each monthly payment could help you save money in the mortgage long run.
3. Refinance to shorter-term loan
Refinancing your 30-year mortgage, for example, to a 15- or 10-year loan could save you a huge amount of money on interest if you had bought your home when interest rates were higher. Before you decide to refinance, make sure you have at least 20% equity based on the current market value of your home. Ask your lender to come up with numbers to break down the cost, especially if you don’t plan to stay in your home long term.
4. Create your own amortization schedule
You don’t need to refinance in order to pay off your loan early. By creating your own amortization schedule, you can skip all the fees associated with refinancing. You figure out the monthly payment in your desired year you wish to pay off your loan, then add that extra amount to your current monthly payment.
For any other questions regarding mortgage pay off, visit: http://www.realtor.com/advice/finance/smart-strategies-pay-off-mortgage-fast/ & http://www.realtor.com/advice/finance/what-is-an-amortization-schedule-2/