When you take out a 30-year mortgage, do you really anticipate staying in that house for the full 30 years and paying the mortgage for that long? Odds are your plans are to live there for a few years and sell the house, or live there and pay off your mortgage quickly. If you are one that wants to pay off your mortgage quickly, here are some tips and advice on how to do just that.
How to Pay Off a Mortgage Quickly
Tip #1: Setup Bi-Weekly Payments
By setting up bi-weekly payments, you will be paying one extra payment every year. This would mean you will shorted down your mortgage by 3 years.
Tip #2: Round Up Your Payment Amount
If your monthly payment is $1430, send in a check for $1500. When you make that a whole number, it is easier to budget, but you also start knocking down the principal. This strategy could reduce your mortgage by up to $1000/yr.
Tip #3: Negotiate Rates With Your Lender
Your lender WANTS your business. Do not be afraid to negotiate for a lower rate. Even a fraction of a percentage can result in thousands and thousands of dollars over the course of your mortgage.
Tip #4: Add a “Bonus” End of Year Payment
At the end of the year, make a payment to the principal of your mortgage that is 1x to 2x the size of your monthly mortgage payment or $2500. This could reduce your mortgage by 7 years!
Tip #5: Make Bi-Weekly Payments and an Added Bonus Payment
Combining the two tips would reduce your mortgage by 10 years!
So Should I Pay Down My Mortgage down Early?
Yes, it is a good idea, however, don’t sacrifice other thinks. Be sure you have an emergency fund and enough free cash flow to live on. Once you make the mortgage payment, it is lost and locked inside your walls!!