If you have been head-high cramming to pay off your mortgage, don’t despair! There are several ways to pay off a mortgage in advance. And knowing what to do and how to go about it is tantamount to a relaxing and a more peaceful life. Working hard and not going anywhere means you are doing things the wrong way, so here are some tips to help you off the hook of those costly mortgages.
Add an extra payment to your principal.
One way to see your mortgage rates go down is to add an extra payment to your principal costs. Simply rounding it off instead of paying the exact amount works wonders. The lower the principal becomes, the less goes to cover the interest. This in turn shortens the length of our loan and reduces the interest of your mortgage. Also make sure that the extra amount goes to reducing the principal balance and make sure to read your contract just to make sure you don’t pay for prepayment drawbacks.
Cut back on personal expenses.
This simply should be on your list. Make sure to spend only on your needs and less of your wants. Decreasing your personal expenses means affording to pay more than what you’re usual monthly payment is. Before you purchase something ask yourself if it is a need or you just want it.
Refinance with a short-term mortgage.
Refinancing into a shorter term mortgage has one advantage, it considerably lowers the term and you won’t see an increase in your monthly payments. Refinancing into a 15-year fixed rate is widely used. Your payments are higher but the terms are shorter. The question though is whether you can afford such means with your current income.
Make Bi-Weekly payments.
By paying bi-weekly, you will have a payment of 13 months instead of a year’s payment. Doing a bi-weekly payment does not depend on the amount of loan, but is determined by the interest rate. This is a suitable method to make a spare payment on the principal amount. The outcome is that at the end of the year, you would have had an extra payment made. By this way, you shave off the amount of your principal.
Pay in lump-sum or contribute from other sources.
Make one big payment whenever you can. The amount added to your principal will decrease your payment on the interest. Designate extra money you have on paying for the principal. Perhaps you have just received a bonus, or you just took your salary from an odd job or from freelance work. Those extra amounts will definite help toward making your interest payments less and making your mortgage shorter. Simply making an effort to see the whole picture and be wiser with the money you have helps to prevent you paying extra for a mortgage.