Three ways to pay off your mortgage faster
Even if you have signed on for a long mortgage, with payments scheduled to continue until you’re old, there are ways to speed everything up, experts say.
Knowing your mortgage options and paying attention to details will help you pay off your mortgage faster. Here are three methods that can help you do so:
1) Biweekly payments
By making 26 payments every year, you will be paying down your mortgage quicker than had you made 12 monthly payments. There are 13 four-week payment periods in a year, as opposed to 12 months, allowing two extra biweekly payments. This can add up and help you cut three years off of your mortgage amortization, saving you thousands of dollars in the process.
2) Round up
This is a rather easy and painless way to make your mortgage balance shrink. Round up your mortgage payment by a small amount, regardless of your payment frequency. For example, if your mortgage payment is $575 every two weeks, consider bumping it up to $600. You likely won't feel the additional increase in your budget, yet the savings over the years will be substantial. Consider doing this when you obtain a pay raise.
3) Extra payments
This is a no brainer. Paying extra on your mortgage will help pay off your mortgage much quicker. Though, you have to be disciplined to do this. Most mortgages allow for a lump sum or double up payment prepayment privileges. In addition to changing your payment frequency and increasing your payment up by rounding it out, being able to pay a lump sum will also help save you thousands of dollars and shave off years off of your amortization.
For most people, a mortgage will be the biggest debt you'll ever have. Be financially literate and take advantage of your prepayment privileges. Every little bit helps!