Three Strategies to Pay Your Mortgage Off Early

There’s a good chance that your mortgage is the biggest debt you carry.  While mortgages can come with tax benefits and more, when you get serious about being debt free eliminating your mortgage payment can seem like a great way to free up four figures in cash each month.  But figuring out the best way to pay off that huge mortgage can seem daunting.  But with a bit of planning and strategy this is not as difficult as you think. People around the country are using smart tactics to become debt free.  Here are three great strategies you can use today.

Add more to each payment

When you are sending your monthly payment to the bank, consider adding more than you are required to pay.  There are three ways to do this.  One is to consult an online mortgage calculator and test different amounts until the numbers are in line with your goal.  The second is to determine how much money you can add each month (either a set amount, or as a month by month decision) but make and keep a commitment to paying it down faster.  Finally, you can just round up your mortgage payment to the nearest ten dollar increment.  Even a few dollars each month can save you multiple payments at the end of your mortgage.  Any extra money that you put on your mortgage will lower your principal, which in turn reduces the amount of interest you need to pay over the life of the loan.

Refinance to a different loan length

If you are currently paying off a thirty-year mortgage, investigate whether refinancing your remaining payments to a shorter term mortgage would help you pay it off faster.  Shorter mortgage periods may be available at 10, 15, and 20 years, with 15 being the standard increment. While payments may be higher than your 30-year mortgage, they might not be as high as you’d expect.  Fifteen-year mortgages typically have a favorable interest rate, which can significantly reduce monthly payments as well as the total interest you will pay over the life of the loan.  If you are considering refinancing, shop around to get the best interest rate or work with a local mortgage broker to help successfully navigate your options.  Investigate if you qualify for any local, regional, or federal refinancing incentives that are currently available.

Switch to a biweekly schedule

Some mortgage providers offer a biweekly schedule.  With a typical mortgage repayment plan, payments are made each month, which annualizes as 12 payments per year.  When loan providers offer a biweekly schedule, you are expected to make a payment equal to half of one month’s payment every two weeks.  This works out so that you actually make the equivalent of 13 monthly payments during each calendar year, thus paying off an additional year of mortgage payments for every twelve years you pay.  On a traditional 30-year mortgage, you will end up only making payments for 28 years, which provides an exceptional savings.