5 Uncomplicated Ways To Pay Off Your Mortgage Quicker

August 3, 2023

Paying off your mortgage faster than the thirty years in which you’re required to pay it off sounds almost impossible to many consumers, but in reality, it’s not. It’s a lot easier than you think to take years off the time you’re meant to pay your mortgage, which means you’re also paying it off for a lot less than you owe. You need not win the lottery, borrow more money, or do anything complicated either. If you want to pay your mortgage off faster and for less, you can use one of these exceedingly uncomplicated and straightforward methods. You might not realize just how helpful they are even when you think they seem too good to be true.

Make Weekly Payments

Weekly payments do not need to be the same amount of money as your monthly payment. For example, if your mortgage payment is $1,500 per month, you’re likely not going to make weekly payments of $1,500 every month. If you could afford to do that, you could have your mortgage paid off a lot faster. The purpose of weekly payments is to break down your monthly payment into four equal payments and send them in weekly to your lender. Thus, a monthly mortgage payment of $1,500 equates to paying $375 each week. By making weekly payments, you allow your principal balance to decrease faster. This minimizes the amount of interest you pay every year, which makes your mortgage tens of thousands of dollars less expensive to pay off. If you pay monthly, you will make payments worth eighteen thousand dollars every year. If you pay weekly, you will pay roughly $19,500 annually, which is a full payment more than you would make if you paid monthly.

Continue reading to learn how to round to your advantage.

Rounding Up Weekly Payments

Another way to help you with your weekly payment plan is to round each payment up. Doing this ends up paying off your mortgage years faster and for a lot less money. Using the previous example, you could say you’re paying weekly payments of $375 to equal your monthly payment of $1,500. If you round up payments by to the nearest hundred, you would actually make weekly payments of $400. It doesn’t seem like much when you add a mere $25 to your payment, but it is a lot over the course of a year. Now you’re making an additional $1,300 in payments per year for almost two additional mortgage payments every year. If you pay an additional $2,800 per year, you will take years off your mortgage. You could save approximately thirty thousand dollars over the life of your loan this way.

Continue reading to learn about extra mortgage payments.

One Extra Monthly Payment A Year

If you’re not in the market to pay your mortgage weekly, you could still make one extra monthly payment a year. This is beneficial not only to help you pay off your mortgage faster but also because you get a small tax break for doing so. You pay more mortgage interest if you make one more payment before the end of the tax year, which allows you to deduct more mortgage interest to lower your tax liability. If you make one additional monthly payment every year to your mortgage company, you’re looking at knocking anywhere from ten to twelve years off the life of your loan. That extra payment is all principal, which means you’re lowering the amount of interest you pay. Let’s say you take a $300,000 mortgage. Depending on the interest rate you have, you’re looking at paying approximately $250,000 in interest over the life of your loan. If you can knock out one additional payment, you’re saving a lot of time and interest.

Continue reading to learn how tax refunds can help with mortgages.

Tax Refund

If you get a tax refund every year, you can make a serious dent in your mortgage. You have the power to pay it off so much faster. Let’s say you have a four thousand dollar refund due. Let’s say you just bought a house and you owe $300,000 at 4.4 percent. Your monthly payment is just over $1,500 per month for thirty years. If you only pay what you owe every month, you’ll pay a total of $540,822 for your home. If you apply your entire four thousand dollar tax refund to your mortgage every year using a biweekly payment plan, you’re already paying $19,500 because you’re making an additional payment every year paying bi-weekly. Now that you’re adding an additional four thousand dollars from your refund to this amount, you’re paying an additional $153.84 every two weeks. This equates to a total of $441,358 for your home for just under nineteen years, meaning your mortgage is paid off more than eleven years early and for $100,000 less.

Continue reading to learn why you should maintain the same monthly payments.

Keep Monthly Payments The Same After Renewal

There will be times when interest rates drop and you have a chance to refinance your mortgage for a lower rate. If you keep monthly payments the same after renewal, however, you can pay off your loan faster. For example, you can refinance your home for 3.5 percent rather than the 4.4 percent you are currently paying. If you can refinance for the lower rate but still pay the same amount you’ve been paying, it will save you a lot of money and time.

Your new monthly payment would be around $1,347 if you change, and you’re saving more than $150 per month with the new rate, but you can pay off your loan so much faster if you keep the payment at $1,500. You could pay off the total amount of your mortgage in just over twenty-five years if you pay the original amount even after you refinance for a lower rate. The terms, of course, depend on the specifics of your home, your loan, and your interest rate. However, you have the option to pay a lot less money over the course of fewer years. If you still break it down into weekly or bi-weekly payments, you can pay it off even faster.

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