Paying off your mortgage quickly can bring a sense of financial freedom and security. By reducing the time it takes to pay off your mortgage, you can save on interest and potentially own your home outright sooner.
If you are dead set on ditching your mortgage ahead of schedule, one of the first questions on your mind is probably, “How do I pay off my mortgage faster?”
So, let’s explore some strategies, tips, and resources to help you accelerate your mortgage payoff and achieve your goal of becoming mortgage-free sooner than you may have thought possible.
First, Start With Reducing Your Debt
- Compile your consumer debt, including car loans, credit cards, and student or other unsecured loans. Start by paying those off, which will allow you to make more payments towards your mortgage.
- Look for areas where you can reduce expenses or increase your income to allocate more towards your mortgage payments.
- Make sure you have an emergency fund set aside for unplanned expenses or financial emergencies. These expenses could be home repairs, automotive repairs, medical expenses, or temporary income loss. This way, you will not have to rely on your savings or increase your credit card debt during these times.
- Create a budget every month. Write down your income and expenses and subtract your expenses from your income to ensure you stay on track and do not overspend.
- Remember retirement. A good goal is to invest up to 15% of your income in retirement. But note that investing any amount of your income is better than investing nothing.
- Consider creating a separate savings account specifically for your mortgage payments or setting up automatic payments to ensure you stay on track.
Without completing these steps, your mortgage-free dreams might take longer. But if you have accomplished these initial first-step goals, then you are ready to start taking steps toward paying off your home.
Why Paying Off Your Mortgage Quickly is Beneficial
Paying off your mortgage quickly saves you money on interest and provides peace of mind, knowing that you own your home outright. Paying off your mortgage early can free up your cash flow for other financial goals, such as retirement savings or pursuing other investments. Additionally, being mortgage-free can provide security in uncertain times, knowing you have a place to call your own without the burden of monthly mortgage payments.
Strategies for Accelerating Your Mortgage Payments
One effective strategy for paying off your mortgage faster is to make biweekly payments instead of monthly payments. By making half of your monthly mortgage payment every two weeks, you can make an extra full payment each year, helping you pay off your mortgage sooner.
Check with your mortgage company first before making any extra payments. Some will only accept extra payments at specific times, or they could charge prepayment penalties. When making the payments, select that you want it applied to the principal balance if you’re paying it online. If that’s unavailable, you can include a note saying the payment must be applied to the principal balance, or you could call them and make a payment over the phone. This ensures the payment is not used for the following month’s payment.
Another strategy is to round up your monthly mortgage payment to the nearest hundred or even thousand dollars. This small change can increase your monthly payment and help you pay your principal faster.
Tools and Resources to Help You Fast-Track Your Mortgage
Various tools and resources are available to help you fast-track your mortgage payments. Online mortgage calculators can help you see how different payment strategies impact your loan term and total interest paid. Some lenders offer mortgage acceleration programs or refinancing options to help you pay off your mortgage faster. Additionally, financial advisors or mortgage specialists can provide personalized advice and guidance to help you achieve your goal of owning your home outright sooner.