Paying off your mortgage early gives you flexibility and options. Whether you hope to upgrade to a larger home, eventually spend less monthly, or retire at a younger age, paying off your mortgage will help make that a reality. Plus, paying off your mortgage early will help you to save big on interest over the years, putting cash back into your pocket.
There are some mortgage hacks that you may already know and some new ones that we hope will give you the information you need to make paying off your mortgage simple and fast!
- Make an Extra Payment Each Year: You can do this in a number of ways. You could simply write a check each year for the extra mortgage payment, or you can split it up over twelve months, the choice is yours. With one extra payment per year, depending on your loan’s specifics, you could shave almost ten years off your loan.
- Pay Twice Monthly: One hack for paying that one extra payment per year, is to do bi-weekly mortgage payments or split payments. Many of us are paid twice monthly, so splitting your regular payment up into two will be easier to budget for. Plus, thanks to 52 weeks in a year, this will mean you can pay 13 full payments without feeling the pinch!
- Grow Your Equity and Say Goodbye to PMI: Private Mortgage Insurance (or PMI) is an extra payment you make each month that helps to protect your lender if you should default on your payment. Once you’ve built some equity in your loan, you can eliminate the monthly PMI fees and save cash or pay more toward your loan! (Which brings us to our next point!)
- Pay Like You Still Have PMI: Once you’re able to ditch the PMI, consider paying the same amount, as if you still have PMI, toward your loan each month. Even an extra $100 per month will add up and help you to pay off your mortgage faster.
- Refinance if You Can: Interest rates are low right now, which means it’s a great time to refinance and save some money! Lots of times, a refinance will mean you can work out a shorter-term loan and save tons on interest over the life of your mortgage.
- Squirrel Away Extra: What do you plan to do with that tax refund? Answer: put it toward your mortgage! What will you do with that inheritance? Answer: put it toward your mortgage! How will you spend your annual bonus? Answer: put it toward your mortgage! If you think like a squirrel and put any extra funds toward your mortgage whenever they appear, it will get paid off more quickly. This is simple math, but is difficult for many people to put into practice.
- Find a Way to Make Income From Your Home: If you have a guest house in the backyard, you can rent it out to make some extra money. If you have a spare room, you can take on a tenant for a while. Another option is to rent extra storage space in your shed or garage. This could be a simple way to provide passive income from a space that’s not in use. Any extra income can be put toward your mortgage to make extra payments easily.
Do you have any hacks for paying down your mortgage faster? We’d love to hear some ideas from you!