A Few Ways To Pay Your Mortgage Off Faster
Posted on: 22 September 2018
A home mortgage loan is probably going to be the largest personal debt you will have. Regardless of the interest rate and length of the loan, you can be sure that the amount you end up actually paying is going to be close to or more than twice the price of the property. Of course, unless you have the money to buy the property outright, you are going to need a loan, and you want to keep the monthly payments an amount you are sure you can afford. This means you are going to be stuck paying the interest. However, there are a few ways you can lower the amount of interest you end up paying without increasing the amount you pay each month.
Refinance
Ok, you have probably heard the horror stories of people refinancing their homes to end up losing them in foreclosure a few years later. This was due to the borrowers refinancing for the worth of the property after housing prices went sky high. They then ended up with a larger payment each month because they had borrowed more money and could not afford it. However, you do not have to refinance for the full market value at the time. Instead, refinance only for the current outstanding principle.
This is going to be less than what you originally bought the house for so even if the interest rate is the same it will lower the amount you need to pay each month. If you can get a lower interest rate, it will be even better. However, keep paying the same amount you have been paying since the original loan. It will not increase the amount you pay but will lower the principle quicker which means the loan gets paid off faster and with less interest.
Bi-monthly Payments
Another option is to negotiate a mortgage loan with bi-monthly payments. You will still be paying the same amount each month just in two payments instead of one. As each payment is made the interest will be recalculated based on the new principle. As more principle is paid, the interest amount goes down, so the next payment will have more going toward the principle and so on. It is a good way to lower the amount you owe without increasing the total amount you pay monthly.
Of course, if you can afford to pay even an extra $100 toward the principle each month or perhaps every so often, it can seriously affect the total amount you end up paying for the house. This is especially true in the beginning half of the mortgage loan term when you are paying more toward interest each month than you are paying on the principle.
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