How Do You Pay Off Your Mortgage Early?
Strategies to pay off a mortgage faster include paying more each month, refinancing, making occasional extra payments and switching to a biweekly payment plan, according to Bankrate. Any extra money that goes toward the mortgage reduces the principal and speeds up the payoff.
Increasing the monthly payment is a simple method. Bump up the payment amount to the next $10 or $100 increment. For example, instead of paying the normal $1,276 payment, increase it to an even $1,300. Some mortgage companies set the extra money aside for future payments, so homeowners should indicate that the money is supposed to go toward the principal, advises Bankrate. If you can't afford to pay more every month, pay a lump sum when you get extra money, such as an income tax return or a work bonus.
Another way to sneak in extra payments is to pay half of your monthly mortgage payment every two weeks, notes U.S. News and World Report. This results in an extra payment over the course of the year. Mortgage companies sometimes offer a biweekly payment option, but they may charge a fee for the service. Another option is to simply make a payment every two weeks on your own. You may need to make an extra biweekly payment initially to avoid a late payment.
Find ways to save money such as switching car insurance providers, or cutting your cable service. Where possible, find ways to increase your earnings. Divert any extra or unexpected income to repaying your mortgage. Come up with a reward at the end of the process to keep you motivated.
Refinancing the length of the mortgage is another way to pay it off faster, according to Bankrate. Consider the fees associated with a refinance to determine if it is cost-effective.