How To Pay Off Your Mortgage Faster
Mortgages have become an integral part of modern society. Because the cost of housing is far beyond what the average person is able to pay in one lump, it’s the only way to achieve home ownership without waiting may years to save up. People are left with no other option than to apply for a mortgage loan.
Fortunately, there are financial institutions that have also made it their business to provide loans for home purchase. In fact, there are many options, and you’ll want to ensure that you get the best deal available in the mortgage terms.
No matter who you choose, there are ways to get your mortgage paid off early. Here are three you’ll want to consider.
Basically, the duration for full payment of mortgages typically ranges between 25 to 35 years. That means you’ll be making between 300 and 420 monthly payments. That may sound daunting, but remember you’ll be paying rent anyway so why not have the money going toward something you own?
But rather than pay all those payments over an extended period of time, it’s wise to work towards getting the home paid off early. Here are some ways to do that:
Increase payment frequency:
Normally, you’d be making twelve payments per year. Since most people are paid weekly or bi-weekly, make payments the coincide with your paycheck. For example, if your monthly payment was $1,000, and you are paid every week, you’d pay $250 per week towards your mortgage. Over the course of a year you would pay an extra $1.000 because there are 52 weeks in the year. And all of that extra paid in would come right of the mortgage balance.
You can also use this technique with other pay frequencies.
Increasing your mortgage payments in relation to increments in your salary:
This has to do with the making of payments as and when your salary increases. With this step, you automatically increase your periodic mortgage payment in relation to any increments in your salary or earnings. So instead of simply spending your raise, you allocate a portion of each raise to additional payments.
Making extra mortgage payments from monies that you get unexpectedly:
From time to time we all receive monies that are not expected or regular. This might come from a large tax refund, the sale of an asset, or even an inheritance. Again, rather than go out a spend it, it makes sense to put as large a piece of it as possible towards paying down your mortgage.
Over the course of many years, even small lump sum extra payments will help to retire your mortgage early. The key is to remember that all of these efforts to pay the mortgage down are like money in the bank. They’re to your own benefit.
With these few strategies, you will be amazed at the rate at which you will completely pay off your mortgage.