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4 Ways to Pay Your Mortgage Off Early
Paying off your mortgage early can save you thousands on unpaid interest over the years.
But before you start working to pay off that mortgage, consider if it’s really in your best interest. Is there a prepayment penalty on your loan? Could your “extra payments” earn more in an investment fund? Talk to a financial advisor before making any big money decisions.
However, if you’ve decided it’s in your best interest to pay your home off early, consider the following tricks:
Pay more each month. Do you have a few hundred dollars you can tack onto your monthly payments? This can pay off big in the long run. Unsure of how much to add? Divide your monthly principal and interest by 12, and add that amount to your monthly payment for a year. Doing so will mean you technically make 13 payments in 12 months.
Refinance. If you can refinance your mortgage to a shorter term with a lower interest rate, you can shave thousands off the lifetime of your loan. But remember, there will be costs associated with a refinance, and a shorter term will mean higher monthly payments, so make sure this is a viable option before you dive in.
Make a large “extra” payment. Fall into an extra chunk of change? Funnel it into your mortgage to cut years and thousands in interest. For example, an extra $10,000 payment on a $200,000 mortgage with a 4.5 percent interest rate could slash 2 years from the life of your loan, and over $15,000 in total interest -- depending on when you make that extra payment.
Factor in pay increases. If you get a pay raise, figure out the extra percentage you’re making and tack that onto your mortgage payments. If you’re married, have your spouse do the same.
As a Member of the Top 5 in Real Estate Network®, I have a wealth of real estate and homeownership information that may be of help to you. Feel free to contact me any time to learn more about this important information, and be sure to forward this article on to any friends or family that may be interested as well.
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