Paying off a mortgage is one of the most satisfying moments in a homeowner’s life. The average (and most common) length of a mortgage is 30 years, and since most people spend between 40 and 50 years working, this means that the vast majority of your working life will be dedicated to paying for your home. This may sound discouraging, but there are actually plenty of ways to pay off your mortgage early and enjoy your home knowing that you don’t have any more payments to make. Here are a few tips for getting the weight of your mortgage off your shoulders as soon as possible:
Make Bi-Weekly Payments
Most people make one monthly payment for their mortgage and leave it at that. However, if you do the math, bi-weekly payments can actually save you time (and money) in the end. To break it down: there are 52 weeks in a year, so making payments every 2 weeks would result in 26 “half” payments, or 13 full payments. By paying every two weeks, you end up making 13 full payments per year rather than 12. It may not sound like much, but that extra payment can shave years off of your mortgage, and save you some money that would have been paid toward interest in the process.
Refinance Your Mortgage
The prospect of a 30 year mortgage makes many people cringe, so one of the best ways to pay off your mortgage early is to simply adjust the terms of your payments. For example, you can refinance a 30 year mortgage into a 15 year fixed-rate loan to save time and money. Your monthly (or bi-weekly) payments will be significantly higher, but you end up saving thousands on interest by shortening your loan. Since your payments will be higher this way, it is very important to evaluate your budget and make sure that your payments are not cutting into your other expenditures (25% of your total income is generally recommended).
Pay More Upfront
If you’re already several years into your mortgage, this may not be a possibility for you. But if you are currently looking to buy a home, you should definitely consider paying as much as possible upfront. This will shave years off the life of your mortgage, and save you a lot of money in interest. If you have already started a mortgage and only made the minimum monthly payment, consider using any additional funds to make a second large payment to take a chunk out of your loan obligations.
Pay More Each Month
It may seem obvious, but many people choose to make the minimum payment each month so that they can use their money for other things. Obviously, everyone’s budget and circumstances are different, but paying even a few dollars more each month can go a long way. Never pay more than you can afford to, but whenever you have a little extra money in your back account, you should consider putting it toward your monthly payments. You will be glad you did when your mortgage is paid off early!