Five Ways to Pay-Off Your Home Mortgage
Buying a home is for most people one of the signs that they have become adults and are “stepping to the plate” in the American Economy. Being able to pay off that home is quite another matter and one that the majority of people take decades to accomplish. For most of us, our parents FINALLY paid off their home just short of retirement. I can remember as a child attending “Mortgage” burning parties with my parents.
Now imagine the financial load that would be lifted if you could pay off your mortgage well before the age of retirement! While the dream of living in a paid in full home has to rank near the top of the bucket list for most of us, reaching that goal is another thing.
The following items are just a few possible ways to get that balance paid off sooner. It is by no means all inclusive!
#1 – Buy a house you can afford! This seems like such a simple concept to me but time and time again I see people in a house far larger than their budgets can support.
#2 – Find the lowest interest rate available. Again, just because your friend is a banker, make sure you check around with other lending agencies. Interest rates will make a world of difference not only in the length of time to pay off the loan but in the monthly payment as well. For example: On a $150,000 loan, one percent different in interest will save you over $100 a month.
#3 – One of the fastest and easiest ways to pay off a mortgage is to opt in for bi-weekly payments. By using this option, you will be making your mortgage payment every two weeks instead of once a month. Now your payment will be a little higher but you will actually end up making an extra payment every year compared to the once a month payment plan. It doesn't sound like that much, but it can actually cut 4-9 years off of your mortgage.
#4 – Of course you can always add money to your monthly payment. On our $148,500 mortgage, only $61.42 a month of a $1,200 payment goes towards the principal! $61 a month! $732.00 will take one year off my mortgage in a snap. Of course the further you are into your mortgage the more principal will be applied from each payment. Ask your lender for an amortization schedule. This will explain how your payments are applied each month.
#5 – Other ways to really get aggressive in paying off your mortgage would be to rent a room out or possibly your basement. Some basements are actually small apartments with their own entrance. Depending on where you live, you could easily collect $500-$1,000 a month! Talk about knocking the time out of the payoff schedule with an extra $1,000 tossed at the mortgage!
In reality, you don’t have to make massive changes in your lifestyle to reap rewards in paying off your mortgage. Steady payments towards the principal will knock years off the repayment schedule.
My goal this year is to get debt free except for my house, and then throw all that extra freed up money at my mortgage!!
Thanks for the great tips!
What good advise you gave. Thankfully we only have a couple of years left on ours!
I have never heard of the twice monthly payment plan. Sounds like a good idea especially if it can take years off of the wait to own the house outright.
Great tips. I’ve heard about bi-weekly payments but have never signed up for it. I do like the idea of adding an extra payment at the end of the year to shorten the life of the loan though.
It’s amazing Chase came to us and renegotiated! No fees. It was great!.
I’m going to share this with my father, who is currently considering refinancing. Thanks for sharing.
This is great. Mortages are a lot of work to pay off! These are great tips!
I like to try to add money to my payment when I can. 🙂
Dawn
That sounds like a great deal. One of our cars will be paid off next month and we are totally excited about that.
Those are great things to know. We will be looking at buying our first home in a little over a year; and I”m a bit nervous about it. These are good things to remember.
Great suggestions. We only have a few years left on ours.
My dad told me I need to pay an extra 1/12 of my mortgage payment each month. By the end of the year I had paid for an extra month.
I hate all the home buying stuff. We always end up getting unlucky with it. I wish I could move (hate my house), but we’re stuck with this awful market.
Very good advice!! Of course make sure if you rent out the basement or rooms that it is allowed!! Not all towns, counties etc allow this. Paying an extra payment every year is an excellent suggestion!! And of course looking for the best interest rates–the best advice is not buying a house above what you can afford.