“Pay Off Your Mortgage Sooner: Proven Methods to Save Thousands of Dollars.” That’s right! Paying off your mortgage sooner can be a smart financial move, but for many of us, it’s impossible. However, there are still methods you can use to save on interest.
A mortgage represents one of the largest financial commitments an individual can make. The thought of being tied to monthly payments for 15, 20, or even 30 years can feel like a great burden. Others proceed it like it’s a part of life and leave it at that.
However, let me tell you that there are ways to help you pay off your mortgage sooner, saving you thousands of dollars in interest and reaching financial freedom sooner than you thought possible.
In this article, you’ll discover practical and effective methods to speed up your mortgage payments. This will allow you to take control of your financial future and enjoy peace of mind when it’s done.
Methods On How To Pay Off Your Mortgage Sooner
Biweekly Payments
One of the simplest ways to pay off your mortgage sooner is to make biweekly payments. Instead of making one monthly payment, you’ll make a half payment every two weeks. This can add up to 26 payments per year, rather than 12, which can help you pay off your mortgage faster and save thousands of dollars in interest.
For example, let’s say you have a $200,000 mortgage with a 30-year term and a 4% interest rate. If you make biweekly payments of $955, you’ll pay off your mortgage in 24 years and save $43,739 in interest.
Refinancing
Refinancing your mortgage can greatly lower your interest rate and pay off your mortgage faster. By refinancing to a lower interest rate, you can reduce your monthly payments and put more money towards the principal balance of your loan.
For example, let’s say you have a $200,000 mortgage with a 30 year-term and a 6% interest rate. If you refinance to a 4% interest rate, you can lower your monthly payments by $244 and save $34,739 in interest over the life of the loan.
Extra Payments
Making extra mortgage payments can be a great way to pay your mortgage faster. You can make additional payments anytime; they can be as small or as large as you like. It could be from bonuses, tax refunds, etc.
For example, let’s say you have a $200,000 mortgage with a 30-year term and a 4% interest rate. If you make an extra payment of $1,000 annually, you’ll pay off your mortgage in 25 years and save $23,739 in interest. Or let’s say you receive a $5,000 bonus and apply it directly to your mortgage principal; you can reduce your loan balance greatly. A $200,000 mortgage at a 4% interest rate could save you over $3,000 in interest and shorten your loan term by several months.
Round Up Your Payments
Another effective method is to round up your monthly payments to the nearest hundred. This minor adjustment can lead to great savings over time.
For example, if your monthly payment is $743, consider paying $800 instead. This extra $57 monthly payment can help you pay your mortgage sooner and save on interest.
Creative Ways To Save Money That Can Be Used Towards Your Mortgage
Use cashback apps and credit cards: Take advantage of cashback rewards on purchases you’re already making and put that money directly towards your mortgage.
Try the envelope or 52-week challenge: These savings challenges help you set aside money incrementally. The amount saved can be used for an extra mortgage payment.
Declutter and sell unused items: Go through your home and sell things you no longer need. Use the proceeds to pay down your mortgage.
Meal plan and reduce food costs: Planning meals can reduce grocery and dining-out expenses. You can then apply the savings to your mortgage.
Check and cancel unused subscriptions: Review your recurring charges and cancel any services you’re not using. Then, redirect the money to your mortgage.
Use the library: Instead of buying books and movies, check out your local library, which offers these free.
Free entertainment: Take advantage of free local events, outdoor activities, and community resources for entertainment instead of paid options.
Try DIY: Learn to do simple home and car maintenance instead of paying for services.
Automate savings: Add automatic transfers to a separate account for extra mortgage payments.
Negotiate bills: Review bills regularly and negotiate lower rates on insurance, phone, and internet services.
Start a side hustle: Use your skills to earn extra income and apply it directly to your mortgage.
Use cash for discretionary spending; This can help you stick to your budget and avoid overspending. Any leftover money at the end of the month can go towards your mortgage.
Applying these saving methods to your extra payments, no matter how small, can impact your mortgage. You could add these savings every three to six months or yearly. When you have accumulated a good amount, use it as an extra payment on your mortgage. You’ll be surprised how much you can save!
Benefits Of Paying Off Mortgage
Interest Savings: The earlier you pay off your mortgage, the less interest you will pay over the life of the loan. Paying the principal early can save you thousands of dollars.
Financial Freedom: Owning your home means no monthly mortgage payments, freeing up cash for other investments or expenses.
Increased Equity: Prepaying your mortgage increases your home equity faster, which can be beneficial if you decide to sell or finance.
Cons: Some methods have fees attached.
You’ll have less money for savings.
You won’t be able to use the mortgage interest deductions on your taxes.
Check out this article: https://masteringpersonalfinances.com/the-smart-way-to-juggle-debt-savings/
