This article from Money Talks News offers 3 great ways to pay your mortgage down faster.
1- Shorten the length of the loan. This first one is the hardest if you’re under water on your mortgage: refinance into a shorter term, say go from a 30 year to a 15 yr. With mortgage rates super low, you might be cutting half the time off your loan for an extra $250 a month. But often times financial advisers suggest refinancing and using the freed up funds to put into the stock market or different investment, preferring the homeowners to save on the taxes. It’s a tough call to make, but it can’t hurt to run your numbers with your tax professional as well.
2-Increase your monthly payment. This one doesn’t require you to do anything special with a refi at all. All you do is decide how much more you want to pay towards principle and send it to your bank. Most 30 year mortgages do not have a pre-payment penalty, but be sure to verify that yours satisfies this requirement or you could find yourself paying fees. Maybe your principle amount each month is $460, even if you add on $100 a month, it can take months off your loan.
3-Round up. This one also doesn’t require anything special, just a commitment to do using some round whole numbers on a monthly basis. As nobody’s mortgage payment is a nice round number (usually), you can convince yourself that your mortgage payment is and just make the check out for the higher amount automatically. Even better, set it up with your auto bill pay each month and it’s dummy-proof! Just make sure your extra funds are earmarked to go towards the principle amount on the loan, not the interest. So if you’re principle amount is $460 a month, make it $500 even and watch the savings add up painlessly.
4-Is not on their list, but I’d also like to suggest the bi-monthly payment. This one simply means you are paying the equivalent of 13 months of mortgage payments over a 12 month span. By paying every two weeks, you can painlessly cut the principle and interest over the life of your loan. With auto bill pay, this process can be seamless and simple to implement.
Check with your lender and start saving today!
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