Paying your mortgage off beyond your schedule seems complicated, yet it saves a lot of your effort and time. Not only this, if you pay off your mortgage earlier, it saves hundreds and thousands of dollars of your loan’s interest.
In America, many householders prefer to own their house outright as early as possible, no matter if they get this house by obtaining a mortgage loan. Once they get their home completely, paying a monthly mortgage does not seem very hard for them. Unfortunately, when they discover the idea of paying off your monthly mortgage with an increased interest rate, they seek some ways to pay off their mortgage as soon as possible.
But how to pay off the mortgage faster?
If you are also one of those who look forward to paying their mortgage off before time, below are three tips and tricks to forward your payments.
| As per the Urban Institute, approximately 26.9 million Americans hold their house outright. Some of them purchased it with their earnings, while others acquired a mortgage loan and paid its monthly payments until they were completed. |
Can I Pay My Mortgage Off Early?
When you pay an additional on your mortgage, more amount on your payment is applied to your primary balance. However, before initiate making extra payments, you must dig deep to know about the rules and principles of paying off a mortgage earlier.
- You should not spend your earned money on an expensive mortgage accelerator program, but you can do and get to know about everything by yourself.
- Check the company from where you obtained the mortgage because only a few companies accept additional payment. Otherwise, they only take a required amount on time.
- Add a note along with your extra amount, which you applied to the primary balance. In this note, add not to follow the monthly payments.
If you want to pay off your mortgage as early as possible and you are incredibly concerned about this, you can estimate some strategies to pay your mortgage off earlier. Truth in Equity brings an efficient mortgage payoff calculator to help you pay your home off quickly.
Why do You Need to Pay Off Your Mortgage Quickly?
An average time to complete the mortgage payoff is 13 years, but few people keep this term for 30 years. Well, this lifespan might be shorter as per the lenders. If you plan to stay away from this long haul and want to keep paying your mortgage off earlier, you would feel a tremendous burden removed from your shoulders.
If you have to pay a loan of a 30-year lifespan, you may start to feel it like a load with a higher interest rate every month. That’s why you may seek some ways to pay your mortgage off faster to make your life debt-free and get your house outright without paying further.
Below are the three strategies which you can use to accomplish your goals.
1. Reduce your Expenses
If you are curious where to find additional money to pay your mortgage off faster, you need to make a list of your essentials and reduce your expenses. By diminishing your expenditures, you can spare some amount to add to your monthly payments.
You do this by bringing your lunch to work. Instead of spending money on expensive food from the office canteen, you can get homemade food to your office and keep your lunch cost aside. For instance, if you save only $100 of lunch and add them to your mortgage payments, it would save your interest rate of more than $28,000. Similarly, try to compromise on other expenditures and keep your saved money in mortgage fees.
2. Refinance into 15-Year Mortgage
Another effective way to pay off your mortgage is by refinancing into another mortgage that has a 15-year fixed rate with a maximum of 25% payment. You can refinance an extended-term mortgage into a 15-year mortgage.
However, if you have a low-interest rate already, you can save money on the closing rates of a refinance and quickly pay on your 30-year mortgage.
Anyhow, before going for refinancing into another mortgage, make sure to talk to your creditor about the closing rates. Thus, while depending upon how many closing rates are, you may increase your monthly payments instead of refinancing.
3. Increase your Down Payment
Finally, one of the most efficient ways to purchase a home is with the maximum down payment. If you want to buy your house as early as possible, set a down payment of at least 10%. However, if you’re going to put a more down payment, what would be better than that? The more you set the down payment, the more you’ll avoid paying private mortgage insurance.
For instance, if you obtained a mortgage of $300,000, you need to pay the PMI of $1,500 to $3,000. The only rule is the more you pay in the down payment, the less interest you would pay. It totes up to a lower mortgage payment every month, and it becomes easier to pay your mortgage off earlier.
Bottom Line
So, do you just want to pay off your mortgage earlier because you’re concerned with spending a lot of money on interest rates? Well, if you’re just worried about the increased interest rate, you can consider refinancing in another mortgage with a shorter span. It would help you avoid making additional payments on interest.
On the other hand, you have a lower interest rate, you should perhaps emphasize getting rid of your mortgage earlier. Above are the different strategies you can adopt to reduce your mortgage time and pay it quickly.
If you don’t find any suitable way for you to pay off your mortgage early, you can consult a mortgage professional for better advice. Besides, you can also consult a pro real estate agent to find you an appropriate house that suits your budget to avoid the risk of a mortgage.