Tips to Shave Years Off Your Mortgage

For most people, 30 years may seem like an eternity. Unfortunately, that’s the length of the most popular fixed rate mortgage term. Just because you got a 30-year fixed rate mortgage, it doesn’t mean that you have to stay in debt for that long.

If you want to pay your mortgage off sooner rather than later, keep reading. Here are a few suggestions you can pay off your home loan faster.

Increase your monthly payment

If you wish to cut down the years of your mortgage, we suggest that you bump up your monthly payment by 10%.

A lot of people think that 10% may not make a big difference, but you could potentially get out from under your loan 5 years earlier. Also, the quicker you can pay off your loan, the more you will save in interest.

Refinance

Basically, refinancing involves getting a new loan with better terms so as to pay off the current loan. It is always a good idea to consider refinancing when interest rates drop.

Let’s say you bought a house for $300,000 5 years ago, when the interest rates were at 5%. This gives you a monthly payment of $1,610. If you are to refinance your remaining $275,486 balance to a 15-year loan with 3.36% interest rate, your new payment would increase to $1,951.

Keep making the higher payment and it will help you save thousands of dollars in interest and shave years off your mortgage.

Make bi-weekly payments

By doing this, you’ll be making 26 payments a year, which is equivalent to 13 months. If you are locked into a 30-year mortgage, you’ll be able to pay off your mortgage 4 years faster.

Round up your mortgage payments

When it comes to paying your loan, every dollar counts. One of the easiest ways to pay off your mortgage faster is by rounding up your mortgage payments. Instead of paying $553 a month, why not just pay $600. That extra $47 can make a big difference without putting a hole on your household budget.