5 Ways To Pay Your Home Off Faster
Now that you’ve purchased a house, settled in and made it a “home”, you realize you’re not in a 30 year program. That 30 year program brings interest, so how do you cut down on that massive debt? Here are several ways you can pay your mortgage down faster without feeling like you’re pinching pennies.
Bi-Weekly Mortgage Payments
Bi-weekly payments mean you are paying on your mortgage twice per month, the result is 1 extra payment per year and about 4 years off your total mortgage. On a $200,000 mortgage at 4.25% interest, that’s $34,000 in savings.
The great thing about a bi-weekly payment schedule? You get used to it quickly, it becomes routine and you don’t feel like you’re strapping yourself to live.
Make an Extra Payment Quarterly
You can do this with or without the bi-weekly payment schedule, but if you make 1 extra payment quarterly, that is 4 extra payments a year. If you are following this plan and not the bi-weekly plan, it frees up money on a monthly basis and makes 3 more payments per year than a bi-weekly mortgage does.
Consider a Refinance
Refinancing your mortgage into a shorter term or lower interest rate (or both) is a great way to save money. If you are in a 30 year mortgage, have felt comfortable in that mortgage for some time; consider refinancing to a 20 year, or even a 15 year. The savings in interest are remarkable, and it forces you to pay the mortgage down quicker.
Raise Your Automatic Monthly Payments
If the lender automatically deducts your monthly mortgage payment you will get used to the same amount coming out every month. Once you are accustomed to this, raise that amount by $50 or $100 dollars. If you coincide this with your bi-weekly payment or the extra quarterly payment you will find you do not miss $50 dollars and you are paying it down even faster.
Be Reasonable When Buying
When you go to purchase a home be reasonable, be smart and do not buy a home at the top of your budget. You can make more headway on a modest payment than you can a heavy one. If you ever outgrow your house you can consult a real estate agent to sell and buy a new one that suits your needs better. Remember, most people stay in their homes for 5-7 years before they sell and buy a new one.
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