5 Practical Ways Of Paying Off Your Mortgage Early
Paying off a mortgage can literary take a lifetime. Although it depends on the type of mortgage you have, most of them nonetheless take many years to finish. When you are finally done, it can be one of the most satisfying feelings ever. If you want to get that feel good feeling ahead of schedule, there are some practical ways of achieving it. The following points will expound on the five most useful tactics of finishing your mortgage payments early.
If you can increase the amount you pay every month, then you can pay it off the mortgage earlier. This tactic is especially relevant to people who are earning more currently than when they started the mortgage. If you pay more every month you will finish the payments earlier and save a significant amount on interest.If you can regularly increase the amount over the years, you significantly reduce the payment period.
Instead of adding an extra amount at the end of every month, you can also try making your payments more regular. Instead of making one payment every month, make two, one every two weeks. If you feel you may waste money before the end of the month, making bi-weekly payments is the best solution for you. Since you will be making payments for two years in one year, you will finish the mortgage twice as fast. If you are not sure about the math, make use of online mortgage calculators to help you get a clear picture.
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The first two tactics are mostly for home owners who are enjoying a higher flow of cash every month. Some home owners get their extra money in one-time events rather than a constant flow. Before you spend all your extra cash on other things, allocate some of it to your mortgage. Ensure that the terms of your mortgage allow for this and make the amount significant.
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When the conditions are right, you can also refinance your mortgage. There are two main ways in which you can take advantage of refinancing. To begin with, refinancing means obtaining a new mortgage to replace your original one. If you come across a mortgage with better terms than the one you have, consider refinancing. The first way of refinancing is to secure a mortgage with a shorter repayment period. The new mortgage may have higher monthly payments hence you should ensure that you can sustain the payments.
Secondly, you can take a new mortgage with a lower interest rate. For this second option, the new mortgage will still be repayable in the same number of years as the first one. Due to the lower interest rate, the new mortgage will also have a lower monthly contribution. If you continue paying the original amount, you will be paying extra and thereby finish earlier. There are some expenses associated with this process and you should therefore consult widely before you settle on it.