Ways to Payoff Your Mortgage Faster
Paying off your mortgage may seem like an impossible task, especially when you consider the size of the debt and the long time it takes to pay it off. However, there are ways to reduce your mortgage term faster than the traditional 30-year term. In this blog post, we’ll share some tips and tricks to help you pay off your mortgage faster and save money in the process.
1. Make Bi-Weekly Payments
One of the easiest ways to pay off your mortgage sooner is to make bi-weekly payments instead of monthly payments. By doing this, you’ll make 26 payments a year, which is equivalent to 13 monthly payments. By paying more each year, you’ll reduce the amount of interest you pay over the life of the loan and pay off your mortgage sooner.
For example, if you have a $200,000, 30-year mortgage with a 4% interest rate, making bi-weekly payments can save you over $30,000 in interest and pay off your mortgage four years earlier.
2. Refinance Your Mortgage
Another way to pay off your mortgage faster is to refinance your mortgage to a shorter term, such as a 15-year mortgage. While your monthly payments will be higher, you’ll reduce your mortgage term and save thousands of dollars in interest.
For example, if you have a $200,000, 30-year mortgage with a 4% interest rate, refinancing to a 15-year mortgage with a 3% interest rate can save you over $100,000 in interest and pay off your mortgage 15 years earlier.
3. Make Extra Payments
If you can’t refinance your mortgage, you can still pay it off faster by making extra payments whenever you can. Whether it’s a bonus from work, a tax refund, or an inheritance, applying extra payments to your mortgage can help reduce the amount of interest you pay and pay off your loan faster.
For example, if you have a $200,000, 30-year mortgage with a 4% interest rate and you make an extra payment of $1,000 a year, you can pay off your mortgage five years earlier and save over $15,000 in interest.
4. Make Your Home Energy Efficient
Another way to pay off your mortgage faster is to make your home energy efficient. By installing energy-efficient appliances, windows, and insulation, you’ll reduce your monthly utility bills, leaving you with more money to put towards your mortgage.
For example, if you save $100 a month on your utility bills by making your home energy efficient, you can put that money towards your mortgage and pay it off faster.
5. Downsize Your Home
If you’re willing to make a big change, downsizing your home can be a great way to overpay your mortgage. By selling your current home and moving into a smaller, less expensive home, you can reduce your mortgage debt and save money on utilities and maintenance costs.
For example, if you sell your $300,000 home and buy a $200,000 home, you’ll have $100,000 in equity to put towards your mortgage. By applying that equity to your mortgage, you can pay it off faster and save money on interest.
6. Make Smart Financial Decisions
Finally, the most important way to pay-off your mortgage faster is to make smart financial decisions. This means avoiding unnecessary debt, creating a budget, and living within your means. By doing this, you’ll have extra more money to apply towards your principle.
For example, if you avoid taking on unnecessary debt, such as credit card debt or high-interest loans, you can use that money each month to accelerate your pay off. Similarly, by creating a budget and living within your means, you can identify areas where you can save money and put that money towards your mortgage.
Paying off your mortgage fast may seem like a daunting task, but there are many ways to achieve this goal. Whether it’s making bi-weekly payments, refinancing your mortgage, making extra payments, making your home energy efficient, downsizing your home, or making smart financial decisions, there are many strategies you can use to save money and reduce your loan term.
At Metropolitan Mortgage Corporation, we’re committed to helping our clients achieve their financial goals. If you’re looking for more ways to pay off your mortgage quicker, we’re here to help. Contact us today to learn more about our mortgage products and services.