Mortgage Guru

Six ways to pay off your mortgage early


Everyone has dreamed of paying off the mortgage early. You’ve been taught from an early age. You go to school, work hard, get a degree, get married, and get a house, and then you have kids. So that’s, that’s the routine everyone has learned from childhood. But people forget that once you buy the house—your real-life starts. Most of the salary goes towards paying your mortgage. Mortgage is essential in today’s society. You cannot buy a home without a mortgage unless you are filthy rich. Everyone must have a house, and a mortgage is essential. Now, most of the time mortgage comes in 15 or 30-year terms. And what happens when people start, start paying, when people get the mortgage, and then they start paying. Once they start paying off the mortgage every month, they continue to pay for couple of years. And after that, what happens, either interest rate is low, or because of some circumstances, after five to seven years, people try to refinance the house. Once they refinance the home, guess what happens, your cycle starts all over again. No-one educates them that hey, when you were paying the mortgage for past five years, you have paid only 20-25% principle. You have paid 75-80% interest to the bank. If you refinance, it will start all over again. So overall, people have a difficult time paying off the mortgage. It seems like an unachievable goal.

So there are a few tricks and tips that you can apply to help you pay off your mortgage faster.

1. Save, Save, Save

The first tip is to save more and pay more towards your mortgage. To apply the first tip, you almost have to look at your budget. It would be best if you utilized mindfully spending principles. Before you spend on anything you want to think about, mindful spending is that is it really needed? Can I live with something else? Once you start having that concept inside your consciousness. You will see major changes in your spending habits. If you are going to eat outside or you are doing anything, you are buying anything. And you are thinking about that concept of mindfulness; then you will see that you are not spending that much. You also want to look at your budget. And then, see what else you can do if you start saving some money-saving, even an extra $100 a month. That’s a lot. If you start paying that $100 towards your mortgage, that will show that you are paying off your mortgage a few years sooner. It could be two or three years sooner. It depends on how large is your mortgage.

2.Use Extra Payments Per Month

The second tip is that pay an extra payment to your mortgage. It means that whenever you have extra money, start paying extra towards the principal. So, suppose that every month, you are paying $200 extra. If you start paying $200 extra to your mortgage, it will greatly impact your mortgage overall. So, paying extra monthly basis. Hopefully, you get some tax refund each year because you own a house and have itemized deductions. So every year, you get few thousand of dollars extra. Take that money and put it towards the principal, so when you send it to your mortgage company, make sure that you write down that towards the principal. If you do that, you will see a big difference that will reduce your mortgage and turn out big time.

3. Biweekly Payments

You can utilize bi-weekly payment method. So some of the banks, they, they allow you to pay on bi-weekly basis. So, when you are receiving your paycheck, you are making 50% of your monthly mortgage payment. Obvioussly, when you are making biweekly payments; you are making 26 payments in a year. That is one payment extra for the year. In that way, you will save on paying interest and balance. , you will reduce few years off your mortgage. Will it reduce significantly? No, but it will it reduce few years.
So, some vendor lenders offer this program natively and some won’t. You will need to call your bank to findout. If they do not, you will find third party offering up with additional fee.

4. Recast Your Loan

The fourth tip is going to be to recast your loan when you can. It is not a popular term, and some lenders do not like that, and they won’t allow it. But whenever you are making a large payment. Suppose that or you received large money suddenly. Then you can ask them to recast it. They have to look at, give you a better rate, and reduce it, but most of the time, lenders won’t prefer that because they are losing money.

5. Add Additional $10 A Month

One of the best tips is to add an additional $10 every month. So, it seems simple but it is little complicated. The day you start your mortgage, you look at the payment and add $10. Next month you add an additional $10 and so on. Since you are adding $10 to your previous payment, it does not put lot of stress on your budget, and you make a big difference in the outcome. So let’s look at one example. Your monthly payment is $1000. So you send first month payment of $1010. Next month you will be adding $10, so payment would be $1020. If you keep going like this, you will shave off several years off your mortgage. I have seen people tried to add $1 a day also and they reduced several years off their mortgage.

6. Round-Up To Nearest Hundred or Thousands

The last method is the easiest. You take your monthly payment and round up to nearest hundred or thousand. You decide what you want to choose and stick to it. So, let’s look at one example. Suppose that you have a payment of $913. So you are going to round up to near hundreds, or 1000s. Some people do it, hundreds some people do it 1000s of either way is fine. So you will pay $1000 to your mortgage. It seems little amount, but it will make a big difference.
The bottom line is that you can choose one strategy or multiple or hybrid. They work. It will save you thousands of dollars in interest and several years off your mortgage. Remember, think twice before you refinance. Your payment starts all over again. Is this what you want to do? I have refinanced my house three times in the last 20 years, and I could not pay off my house. I paid lot of interest to banks and now I regret my decision.

I have always been an employee in my life. I have applied almost all of the methods, and I realized that all of the above techniques work, but they are slow. If you really want to pay off your mortgage faster. You need to legally and ethically hack your loan. That will save you hundreds of thousands of dollars and reduce your term from 30 to 6-8 years. You need to go to mortgageguru.org and see if this program works for you.

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