Plano homesAs with any loan or line of credit, there are benefits to getting your Plano mortgage paid down. You’ll pay less in interest, potentially saving thousands over the repayment period. Moreover, you’ll own your home outright that much quicker.

Let’s explore four money-smart strategies that will help you to pay your mortgage off faster.

Start With The Obvious And Increase Your Payments

It won’t come as a surprise that one of the easiest ways to get your mortgage paid off is to increase the amount you put towards your monthly payments. Most lenders will allow you to place any extra funds directly against the outstanding loan amount or “principal.” This is very efficient as it avoids having to commit any additional funds to interest.

One trick that many families use is to round the payment amount up to the nearest hundred-dollar figure. For example, if your mortgage payment is $652.32, you would pay $700 instead. This might be an easy burden on your wallet but still amounts to an extra seven percent of your payment.

Accelerate Your Payment SchedulePlano Mortgage

Another way to get your mortgage paid off as quickly as possible is to accelerate how frequently you make payments. For example, if you are currently making payments on a monthly basis, you can switch to bi-weekly payments instead. This means that instead of 12 large payments per year, you’re making 26 smaller payments. However, your interest will still compound on a monthly basis which means that over time you’ll end up paying less in interest. Not all mortgage products support this, so it is best to check with your mortgage professional to ensure it is an option open to you.

Dedicate Your Tax Refund To Your Mortgage

If you receive a tax refund or other large sum of money, consider using it to pay your mortgage down further. This is an excellent use for a spare block of cash as it gets you one step closer to owning your home, free and clear.

Home loan infoRefinance Your Mortgage To A Shorter Term

Finally, one last strategy is to look at a shorter term for your mortgage. For example, if you started with a 30-year amortization, you can refinance down to a 15-year loan instead. This will require having access to significantly more money to place against your payment, so be sure to carefully budget for this additional cost.

These are just four of the many ways that you can get your mortgage loan paid off faster. For more information or to inquire about a mortgage for your next home, contact Warren Whitaker by phone or text at 972.523.8353 or Warren@Lendhome.com. He will share how to navigate the credit score and mortgage process so you can land the home of your dreams.

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Payoff3More than 20 million Americans own their homes outright. Some bought their homes with cash while others whittled away at their mortgages year after year until they were gone.

That leaves about two-thirds of the nation’s homeowners with the goal of one day making that last mortgage payment. Since we’re all about getting out of debt as quickly as possible, here are a few suggestions to get your home loan paid off quickly.

An Extra Habit

Each time you pay extra on your mortgage, more of each payment after that is applied to your principal balance. Here are some options for paying extra and examples of how extra payments will affect the average $220,000, 30-year mortgage with a 4% interest rate:

  • Make an extra house payment each quarter, and you’ll save $65,000 in interest and pay off your loan 11 years early.Payoff2
  • Divide your payment by 12 and add that amount to each monthly payment, or pay half of your payment every two weeks, also known as bi-weekly payments. You’ll make one extra payment each year, saving you $24,000 and shaving four years off your mortgage.
  • Round up your payments so you’re paying at least a few extra dollars a month.
  • Increase your payment when you get a raise or bonus.

Always check with your mortgage company before you make additional principal payments. Some companies will only accept extra payments at specific times or they may charge prepayment penalties. And always make sure the additional money is applied to the principal and not next month’s payment.

Payoff6Refinance—or Pretend You Did

The only type of debt Dave won’t yell at you about is a fixed rate 15-year mortgage with a payment that’s no more than 25% of your take-home pay. You’ll pay much more in interest on a 30-year mortgage and, besides, who wants to be in debt for 30 years?

You can refinance a longer term mortgage into a 15-year loan. Or, if you already have a low interest rate, save on the closing costs of a refinance and simply pay on your 30-year mortgage like it’s a 15-year mortgage. The same goes for a 15-year mortgage. If you can swing it, why not increase your payments to pay it off in 10 years?

Using the same stats above for the average mortgage with a 15-year term, you’d need to bump up your monthly payment to about Payoff4$2,200 to pay off your loan in 10 years. You’ll save $25,000 in interest, but best of all, you’ll be out of debt five years sooner and have $2,200 a month to invest for retirement, save for college, or give away!

Downsize

This could be a drastic step, but if you’re set on getting rid of your mortgage, consider selling your larger home and using the profit to buy a smaller, less expensive home.

With the profits from your home sale, you may be able to pay all cash for your new home, but even if you have to get a small mortgage, you’ve succeeded in reducing your debt. Now your goal is to get rid of it as quickly as possible. The smaller the balance, the quicker you can make it happen.  **From DaveRamsey.com**

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