Four Methods To Pay Off Your Mortgage Loan Faster
Paying off your mortgage early means saving thousands of dollars in interest and freeing yourself from the burden of long-term debt. It’s a dream nearly all homeowners say they aspire to, but accomplishing such a lofty goal feels out of reach for many. Try the following four methods to tackle your home loan debt fast.
Think “Lucky 13”
At the end of each 12-month calendar year, make a 13th payment against the principal balance on your loan. Experts say this simply, once-per-year action can shave six years or more off your mortgage, depending on the total you owe. If it seems unworkable to make an extra payment in the same month you may be buying holiday gifts and saving for expenses in the new year, try setting aside one twelfth of your payment amount each month, beginning in January.
As you make each monthly payment, consider rounding the amount up to the nearest hundredth. For example, if your mortgage payment is $1,125, pay $1,200 each month instead. Although the math works out differently for each individual homeowner, this tactic saves you an average of three years’ worth of mortgage payments.
Refinance to Pay MORE
Sure, most people refinance to get a better interest rate or a lower monthly payment, but it’s possible to refinance your loan so you’ll pay more each month, too. This is exactly what savvy homeowners are doing to literally cut their mortgage length in half. If you can swing it financially, refinancing from a 30-year mortgage to a 15-year mortgage save thousands in interest payments and helps you build home equity at twice the speed.
Get an ARM
Although many finance professionals caution against Adjustable Rate Mortgage (ARM) loans due to their fluctuating interest rates, they offer big benefits for some homeowners. ARMS typically come with lower initial interest rates, which saves you money in the short-term, and many can have stable rates in the future. Much depends on market conditions, so keep an eye on your rate if you decide to take on an ARM.
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