by Susan Paige
What if you could pay off your thirty-year mortgage twenty or even five years sooner? As it’s likely your housing costs total about a third or more of your overall income, it would be safe to assume that this would be a huge burden off your shoulders. Although it will require some research, time, and dedication, there are several options that would free you from your mortgage a lot sooner than you planned. Here are a few:
One of the first options that are worthy of taking a closer look at is refinancing your mortgage. If you have a 30-year mortgage, refinancing into a 15-year mortgage would allow you to pay your debt off in half the time and save thousands of dollars in the process. For example purposes only, let’s say you have a $250,000 30-year mortgage at 4.5%, you could refinance through a service provider like Eagle Home Mortgage for a 15-year mortgage at 4%. This would shave down your time and save you more than $50,000 after closing costs.
Make Bi-Weekly Payments
There are only 12 months in a year, which essentially means you make 12 mortgage payments each year. If you start budgeting your mortgage payments bi-weekly, however, you add an additional payment every year. Since you’ll be making 26 half payments that add up to 13 monthly payments. This can knock several years off your mortgage. If, however, your mortgage company doesn’t allow bi-weekly payments, then you can create a checking or savings account and deposit the amount into there. Then you’re still budgeting 13 payments each year.
Add Money When You Can
Every penny counts when it comes to paying off your mortgage. So, even if you can’t afford to double up or make large contributions each month, adding an extra $20 or $50 dollars to the payment still goes a long way in paying off the debt. Each month, set aside a comfortable amount and add it to the mortgage. If you can, increase that amount each month. You can do this by using coupons, for instance, any savings you got from the discount can be added to the mortgage.
Use Your Tax Refund
Many homeowners receive a sizeable tax refund every year. Rather than using it to splurge on things, you might want, apply it to the principal balance on your mortgage. If your return is several thousand dollars, you could essentially be shedding months off your debt each year.
Get Real About Your Budget
Often times you are lead to believe that the extra money just isn’t there to apply to your home payments. Though it can be true for some, many times it just requires a second look and some discipline. By creating a realistic but doable budget you can find areas where you’re overspending and cut back. This will free up additional funds you didn’t believe you had to pay down the debt.
Start a Side Gig
If you simply don’t have enough extra money or the ideal credit there is still one other option you have to pay down your mortgage faster – starting a side gig or business. There are a lot of people who have been successful in turning a skill or passion into a lucrative opportunity. You can do it when it’s most convenient for you so its a lot more convenient than getting a part-time job. The money you make from the side gig can be allotted exclusively for the house payment.
The cost of homeownership is steep. Your mortgage is certainly one of the biggest and longest debts you’ll have. If you’d like to reduce the amount you’re paying and eventually pay the debt off sooner, it is possible. Whether you decide to use one, some, or all of the above-mentioned options be sure to do research to weigh the pros and cons of each.