Are you feeling burdened by the remaining length of your mortgage? If so, there are plenty of ways to take time off your mortgage and save yourself money in the long run. Even better? These methods do not require spending a lot of extra money.
Keep your other financial obligations in mind while considering these options. Having emergency savings and putting money aside for retirement is very important for long-term financial stability. Those financial commitments shouldn't be set aside for the sake of paying off a mortgage faster. Consider consulting a financial adviser for additional support if you're unsure what would be best for your financial future.
5 Effective Ways to Pay Your Mortgage Off Faster
- Refinance your mortgage. If you currently have a 30-year mortgage, lowering the term to 15 years can be a good option. If you have had your mortgage for 7 years at an interest rate of 4.875%, a new 15-year mortgage with an interest rate 4.25% would save you $51,313 in interest on a $165,000 loan. Refinancing doesn't always make sense though, read more about refinancing or get in touch with one of our mortgage experts to consider what's best for your situation.
- Pay a little extra towards the principle each month. The savings can be impressive when you pay even a little extra on a mortgage. This is because you're paying that extra amount on the principal balance and decreasing your interest over time. Use our extra payment calculator to see how an extra payment of $50 or $100 could save you money and help pay off your mortgage faster.
- Consider a biweekly payment option. If your mortgage servicer allows, divide your mortgage payment in half and pay that amount every two weeks. In essence, what you're doing is adding a 13th payment to your annual number of payments. This can be a simple way to pay extra on a mortgage as you're making the extra payments during months when you receive an extra paycheck, assuming you're paid bi-weekly.
- Make a lump sum payment. If you have the funds to invest in your mortgage, a lump sum principle reduction payment can be a great option. This method involves paying one large lump sum towards the mortgage. It will recast your your mortgage, meaning it will be re-calculated so the term remains the same but the monthly payment is lowered. Not all mortgage companies offer this option, but Honor Bank does!
- Budget to make an extra payment each year. By budgeting an extra payment once a year, you will reduce your term and save in interest, similar to other methods mentioned. Money received outside of your expected income, such as a bonus or tax return, provide great opportunities to consider this option.
Here at Honor Bank, we strive to provide the highest level of savings possible based upon your financial circumstances and goals. We provide expert advice and support when considering your mortgage and banking needs. Call today to schedule a free mortgage check-up and see what options you might have for paying off your mortgage faster.