As a rule mortgage is the largest debt people have and many of us would be glad to cover it as soon as possible and not to be burdened with these obligations for 30 years, the usual home loan term. There are some simple, yet effective ways to pay off your mortgage loan sooner and you can make use of them to get rid of the debt a lot faster.
- Biweekly Payments
As a rule, the homeowners make monthly half-sized mortgage payments, but if you make bi-weekly payments, there will be 26 of them throughout a year, which means 1 monthly payment more each year.
Speak to your lender and find out the best way to arrange such payments, make sure they are designated as “applied to the principal” otherwise the loan provider may treat them as prepayments to the next payment amount.
It’s easy to check your savings with the help of any mortgage calculator, you will be surprised to see that tens of thousands of dollars can be saved and several years of payments as well.
Be careful and avoid various “mortgage acceleration” products offered by the third parties, you can cover your mortgage earlier yourself and completely free of charge.
- Extra Cash to Your Mortgage
Whenever you get some bonus, raise or gift, dedicate it to your mortgage payment or at least try to get rid of the high-interest debts. Make it a rule to devote extra means into covering your debt. The other option is to invest the money in some undertaking, where you can earn more than the interest rate of your loan.
- Rounded Up Payments
In case you have, forinstance, to cover 926$ every month make it a rule to round this amount up, pay 1000$ and better to do it on a regular basis.
- One Extra Payment Annually
Once in a year make a holiday gift to yourself, covering one extra payment, another option is to increase every monthly payment by 1/12. In such a way you will pay off your 30-year mortgage in 26 years.
- Refinancing Into a Shorter Loan
With a shorter term mortgage you can save a fortune. Make a careful research of the current rates available, compare the costs and advantages of each option, and see what you can save. You may turn to the services like Interest Rates Mortgage Loans, providing help from a network of lenders, easy to compare.Shorter term mortgage not only allows you to cover your debt more quickly, but often offers lower interest rates.
- Refinancinginto a cheaper mortgage
In case you are afraid to refinance for a shorter term, try to refinance into a cheaper home loan and cover it in 10, 15 or 20 years instead of 30. Though you won’t be offered lower interest rates, you’ll still benefit from paying lower interests over the years.
Be reasonable in making up your mind whether to refinance or not, you’ll need to be disciplined and resolute to make higher payments. In addition, you will have to bear additional costs for refinancing: lender’s origination fee, title search feeand insurance, taxes, your credit report fee, etc. Such costs can be only justified if you are going to stay long in your house. By the way such fees are better to be paid from your pocket, otherwise incurred into your mortgage amount they will increase your monthly payment as well.