Wouldn’t it be nice to live free and clear in your very own home with no house payment to worry about? Besides winning the lottery and paying off your mortgage in one fell swoop, there are other ways to pay it off quicker and there’s no luck necessary to accomplish it.
Make an extra mortgage payment every year. Set aside 1/12 of your mortgage payment and put it in savings. At the end of the year take the money out of savings and make an extra payment. Or, just apply that 1/12 extra every month onto your normal payment. Better yet, make an extra payment every three months. If you can accomplish this, you will save thousands in interest and shorten the length of your loan significantly.
If your interest rate is high and you’re able to negotiate low closing costs, it may be beneficial for you to refinance your home if a lower interest rate becomes available to you. Your monthly payment will be lower but the length of your loan will remain the same or may even add some time. However, if you apply the tips above and make extra payments every year, you will pay off the loan sooner.
Are you paying PMI insurance on your loan? If you had less than a 20% down payment when you bought your house you most likely are paying PMI. Once you have paid 20% of your loan, this extra cost for PMI should be removed from the loan making your payment lower. Keep an eye on your loan so you know when you’ve reached 20% and then make sure the PMI is taken off. Use this savings toward making extra payments.
Even just $100 extra every month applied toward your principle can save you thousands of dollars in interest over the life of a loan. Start saving! The sooner you start making those extra payments the more money you’ll save on your loan and sooner than expected you’ll have one less major bill to pay every month. Just think what you could do with that extra money! Vacation anybody?!