Smart Ways to Quickly Pay Off Your Mortgage
You’ve just purchased one of the new homes in Savage MN, having made the down payment, paid closing costs and all the other fees related to buying a property. All of that scrimping and saving and attention to your credit score has paid off and you now have a beautiful home. However, you also have a mortgage. Even though you’ve worked out what you can comfortably afford to pay in monthly mortgage payments, having 30 years of those payments hanging over you can feel daunting. If you’d like to pay your mortgage off a little faster, here are a few tips to try.
First off, make sure you can afford to put extra money toward paying off the mortgage. That means you should be financially stable enough to weather any unexpected costs with a solid next egg, have enough going toward college education funds, have high-interest credit cards paid down, and plan to stay in your home for 20 or 30 years. If you don’t have these important areas already covered, it’s not worth trying to shave off time on your mortgage. You’re better off financially focusing on creating security in these other areas first.
One of the easiest ways to cut down about four years of payments is simply by making one extra payment each year. Just make sure that payment goes directly toward the principal. This is a convenient way if you typically get a year-end bonus, but you can also set aside some money in savings every month to put toward an extra payment at the end of the year. Of course, it doesn’t have to be done only at the end of the year. You can make an extra payment on the principal any time you find yourself with an extra lump sum.
Alternatively, if you find yourself with enough extra money each month, you could add a little extra to each month’s payment. The key is that the extra money needs to go toward the principal rather than having it simply be applied to the following month’s payment. This takes a little extra work to make sure the extra money is going to the principal, but it can ultimately save you a significant amount in interest payments as well as reduce the time of your loan.
While refinancing is an option if you can get a shorter-term loan for a lower interest rate than you originally had, it is important to make sure you won’t end up paying extra in the long run due to closing costs. Get your lender to crunch the numbers for you carefully before going this route.
Rather than refinancing and paying the extra costs involved, you could instead create an amortization schedule. This process is highly structured and aggressive and doesn’t necessarily change your immediate monthly payments and interest, but with discipline and consistency — and the help of your mortgage lender — you could, conceivably, reduce your payment time by 10 or more years.
Purchasing one of the new homes in Savage MN from Key Land Homes is a dream come true for many buyers. If you’d like to own that dream outright a little sooner, talk to your lender and look at your finances to see how to make this new dream a reality.
