The following are 5 tips that can help you to pay down your mortgage sooner:
1. Believe that being mortgage free is a possibility for you. Many can’t picture being mortgage free as their reality and as a result, they don’t seek opportunities to be pro-active with their mortgage.
2. Sign up for weekly mortgage payments instead of monthly. If you currently pay $1,000 once a month for your mortgage you’d pay $250 once a week instead. The advantage to this approach is that you are knocking off more interest when you make weekly payments instead of monthly. Many who understand this concept sign up for bi-weekly payments, yet, weekly payments are even more advantageous. On a $200,000 dollar home at 5% interest, a person will knock their mortgage from 30 years to 25 years simply by doing bi-weekly instead of monthly payments. They’d also end up saving over $30,000 in interest. This example was of a bi-weekly payment plan, you’d save even more with weekly payments!
3. Don’t purchase mortgage coverage through your bank, go with life insurance instead. Banks love to sell new home owners on the idea of paying a little extra each month to have mortgage protection. Theoretically, if one of the home owners were to die then the bank would pay off the remaining amount on the mortgage. The catch here is that the mortgage owners are paying for mortgage protection on the original mortgage price. This means that the owners may be paying a monthly fee for $200,000 worth of coverage (original mortgage price) and when an emergency strikes, the bank would pay off the remaining mortgage which now may only be $120,000. For this reason, it’s better to purchase a life insurance policy for at least $200,000 (to cover the mortgage). Overall, life insurance gives you the best bang for your buck compared to going through a bank for mortgage protection.
4. If you have extra money at the end of a month apply it to your mortgage! And/or take your tax return each year and make a lump sum payment to your mortgage. Another idea is to change your payment plan so that more than just your minimum mortgage payment is drawn each month. This could be an additional $10, $25, $50, $100, etc. Your seemingly small efforts now will help you to be mortgage free sooner.
5. At least once every 6 months stop and picture what being mortgage free will be like. How would it feel to be mortgage free? What would you do with your extra cash? Knocking off a mortgage sooner than normal takes dedication and patience. Keeping the vision fresh in your mind is essential to persevering.
Do you have any tips or experience with paying off a mortgage faster? Are you attempting to be mortgage free sooner than what your loan expects from you? Please share your thoughts in a comment below.