Paying off your mortgage early can save you money and help you build wealth. If you think you could never pull it off, read on to find out why you couldn’t be more wrong.
There are plenty of benefits to paying off your mortgage early:
You no longer have a monthly mortgage payment.
You save money in interest.
You cut down on your monthly expenses, which can be particularly helpful if you are nearing retirement.
You gain equity faster, which helps you build wealth.
While it may seem like paying off a mortgage early can be a major feat, there are actually some simple steps you can take to achieve your goal.
Make extra or larger payments. Add a few dollars to your mortgage payment each month and the payments will add up. Some people also choose to divide their mortgage payment in half and make payments every other week rather than once a month. The value in doing this is that you’ll end up making one more extra monthly payment per year than you would if you simply made a payment once a month. Always check with your lender first before changing your pay schedule.
Refinance your mortgage. Sure you might refinance to get a lower interest rate, but you can also refinance to get a shorter-term loan. Rather than taking 30 years to pay off your loan, you might pay it off in 15 or 20 years. Typically, shorter-term loans come with lower interest rates, as well.
Make additional lump sum payments. Maybe you don’t want to make an extra payment every month, but every so often you have a stash of cash you can add to your mortgage. By taking your tax refund or a work bonus and paying it toward your mortgage, you can reduce the principal on your loan and pay the mortgage off faster.
There is one caveat you should consider, however. If you have higher-interest debt such as credit card debt or a car note, pay that off before you put extra money toward your mortgage.
A sound financial plan is one that keeps all debt in check. Let HomeFree-USA help you take the next step.