Mortgage Management: How to Pay off Your Home Quickly
Wednesday, January 10, 2018, 6:00 AM | Leave Comment
Getting a mortgage is one of the biggest — if not the biggest — financial decisions you will ever make.
Mortgages are long-term commitments that will take you many years to pay off.
However, there are some ways you can pay off your home more quickly.
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Get a Shorter Loan Term
One of the best ways to pay off your house more quickly is to get a shorter term on your loan.
Most people get a 30-year mortgage, but there are various terms available. One of the most common alternatives is a 15-year loan. In addition to paying your home off more quickly, the main advantage of the shorter term is that you save money on finance charges.
The difference in interest payments between a 15-year loan and a 30-year loan is tens of thousands of dollars over the life of the loan. The main disadvantage to a shorter loan term is that your monthly payment will be higher.
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Make Extra Payments
Another way to pay off your home more quickly is to make extra payments.
Some companies, like Home Mortgage of America, know that you can do this a number of ways.
You can pay a little extra each month, although you need to make sure your lender applies the money to the principal balance and not just interest.
You also can set up your payments so that you pay every four weeks rather than every month, which means you will make one extra payment each year.
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Refinance
Refinancing your loan to take advantage of lower interest rates is a way to pay off your home more quickly.
The best way to do this is to refinance into a loan with a shorter term, such as going from a 30-year loan to a 15-year loan.
If you refinance into a loan of the same term, it may save you money on finance charges, but it won’t help you pay off your house more quickly and could actually extend the time.
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Make One-time Payments
If you get a bonus at work or inherit some money from a relative, you can use it to make extra one-time mortgage payments.
Doing so will reduce your principal amount and help you pay off your home faster. You should weigh the pros and cons of doing this vs. Using the money for some other purpose.
Paying off your home more quickly can save you money and give you peace of mind. Following these tips will help you to reduce your mortgage debt.
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Rachelle Wilber is a freelance writer living in the San Diego, California area. She graduated from San Diego State University with her Bachelor’s Degree in Journalism and Media Studies. She tries to find an interest in all topics and themes, which prompts her writing. When she isn’t on her porch writing in the sun, you can find her shopping, at the beach, or at the gym. Follow her on twitter and Facebook.
