15 Apr How to Pay Off Your Mortgage Faster
As a Smyrna mortgage lender team, we give a lot of advice regarding paying mortgages down faster. A mortgage is one of the largest debts that you will be responsible for paying. By paying it off quicker, you are able to save money. We have some tips on how to pay your mortgage off quicker that we will share with you.
Focus on the Principal
The amount that you have borrowed is called the principal, which doesn’t include the interest amount you pay each month. When you make a payment, part of it goes to the interest of the mortgage and part goes toward the principal. One way to pay your mortgage down quicker is to make some extra payments toward the principal alone. This will then help lower your interest and save you money over time.
Bi-Weekly Payments
Normally, homeowners will pay their mortgage in monthly payments. You can make an extra monthly payment a year by taking the cost of one payment and splitting it into 2, then making 2 bi-weekly payments over the next 2 months. The extra payment you make in those 2 months will go toward the principal and lower your interest amount. Another way of doing this is to just budget for an extra monthly payment to put toward the principal.
Use Your Savings
If you aren’t able to come up with an extra month’s funds, you could open a savings account and put any extra money you get into it. Round up your bill amounts and use the extra to put into savings to make a lump sum payment toward the principal.
Refinancing
Another method for paying your mortgage down faster is to refinance. With this option, you will be taking out a new loan with different terms. You can use the money to pay down your higher interest rate debts, which works to lower your monthly payments. You also get a lower interest rate and you could go with a shorter-term mortgage if you can afford higher monthly payments, cutting the term time in half. If your monthly mortgage repayments are lower and you can still afford to pay the old higher amount, put that extra toward the principal to further speed things up.
Recasting
You may have a situation where you obtain a lump sum of money, such as from a bonus at work, and are able to apply that to your mortgage using recasting. The money is put toward the principal of the mortgage and then the mortgage is recalculated with a new lower monthly payment and a shorter-term time. You could speed things up even quicker if you are able to continue to pay the original monthly payment amounts, using the extra for the principal.
Whether you are just looking for more information before you make your home purchase or you are looking for ways to pay off your current mortgage faster, give the Smyrna mortgage lender team at Accurate Mortgage Group a call today!
There are so many reasons homeowners choose to pay their mortgages off quicker, and a lot of options depending on your situation. Even paying off an extra $25 to $50 a month can go a long way in getting it paid off quicker. If you have questions about paying your mortgage off faster, give our Smyrna mortgage lender team a call today!