5 Steps Towards Paying Off Your Mortgage Quicker

Monday, July 30, 2012, 2:00 AM | 2 Comments

Your mortgage payment is likely the biggest monthly payment that you have to make. If you are sick of making such a big payment every month, paying off your mortgage early can make a huge difference. Imagine what kind of financial flexibility you would have if you do not have to worry about a mortgage payment.

If you’re interested in retiring that huge debt, here are a few steps that you can take to do it faster, brought to you by we know mortgages, your best source for mortgage information.

  1. Switch to a Biweekly Payment Schedule

    One of the easiest ways to pay off your mortgage quicker is to switch over to a biweekly mortgage payment schedule. With a biweekly mortgage payment schedule, you may Of your normal mortgage payment every two weeks. By simply making the switch, you can cut almost 7 years off of a 30 year mortgage if you do it all the time. Why does this strategy work? In reality, you end up making a full extra mortgage payment every year. When you pay every two weeks, you end up making 26 half payments or 13 full payments. This full extra payment goes toward paying down the principal balance. This program can be set up in one of a few different ways. Some mortgage lenders will set up a payment plan for your for a fee. You could also set up the program yourself by simply setting up an automatic payment with your online bill pay with your bank.

  2. Make One Extra Payment Each Year

    Another strategy that you could use to pay off your mortgage faster is to simply make an extra payment every year. With this option, you simply take your normal mortgage amount, and send it in to the mortgage company. The amount will be applied to the principal balance of your mortgage. This will basically have the same impact as using a biweekly mortgage, except that you won’t have to worry about sending in so many payments throughout the year.

  3. Send Lump Sums

    If you want to pay down your mortgage quickly, one of the best things that you can do is to send in large chunks of money as you receive them. For example, if you are the type of person who receives a tax refund every year, you can simply take that amount and send it to your mortgage company. For example, if you are paying an extra $3,000 to $5,000 every year on your mortgage balance, it won’t take long to pay it off. You could do this with bonuses at work, inheritances, prizes, and any other money that you get in a lump sum.

  4. Pay the Following Month’s Principal

    One of the more interesting strategies that you could use is to pay the following month’s principal balance with this month’s payment. To make this work, you will need an amortization schedule from your mortgage lender. This schedule should be provided to you when you get the mortgage. You can see how much principal and interest you pay on every single month of the loan. If you pay next month’s principal, it cuts a month off of the end of the loan term. If you do this every single month, it cuts the loan in half. Toward the end of the process, it will be pretty hard to continue making the principal payment, because you will essentially be making a double mortgage payment every month. However, if you can discipline yourself to make it work, you can cut a lot off of the mortgage.

  5. Refinance

    Another option that you may want to consider is refinancing into a shorter mortgage term. For instance, if you have a 30 year mortgage, you could refinance into a 15 year mortgage with your bank. With this approach, you won’t have to worry about doing any payment tricks or paying more often than once a month. If you use this approach, you will just have to make a normal monthly mortgage payment. In many cases, you can get a lower interest rate by financing into a 15 year loan as well.

If you’ll take the time to implement one or more of these strategies, you can get your loan paid off in no time.

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  2. Jul 31, 2012: 5 Steps Towards Paying Off Your Mortgage Quicker | Mortgage
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