Are you a homeowner? Does that mortgage endpoint seem just too far away? What if I told you that you can actually pay off your mortgage faster than you think? Here are 5 ways that you can pay off your mortgage faster:
Pay extra on your monthly payment. Yep, it is as simple as that. Simply making extra payments on your mortgage payment can save you years of payments and tens of thousands of dollars interest. One highly recommended approach is to divide the amount of your monthly payment by 12 and pay this amount (1/12 of the minimum payment due) on top of your monthly bill. This is the same as paying an entire extra mortgage payment each year! Or, to make it even easier, on a $100,000 loan, an extra $50 per month will shave 5 years off of your mortgage and save you almost $16,000.
Use your tax return for big payments. Whenever you get a tax return or you sell something big, consider sending the “found” money in as a bonus mortgage payment. This can save years and again, tens of thousands of dollars. Even if you do it just one time during the life of the loan.
Make biweekly payments. If you pay your mortgage biweekly instead of monthly, it is essentially like paying 13 house payments per year. Let’s say you have a $200,000 mortgage. Making 26 biweekly payments per year each year would save you almost $30,000 in interest over the life of the loan.
Round up. If your payment is $854 per month, round up your payment to $860. That extra $6 isn’t going to hurt you, but I promise that it will cut back on the payments that you make over the years. We financed our home in 2012 and since the first payment, I have always paid an extra $8 on my mortgage. I have already cut back my mortgage by 1 year.