With foreclosures all around us more people are buckling down and getting their finances in order. Many people are looking into paying off their mortgage early. Imagine if you actually owned your home and didn’t have to make
that monthly mortgage payment! What could you do with that extra money? It doesn’t just have to be a dream if you work at it you can get there! But, where do we start?
One place to begin is looking at your current mortgage interest rate. Rates have been dropping lower and lower over the past couple of years and you would be smart to take advantage of that. As you look into refinancing you might consider refinancing to a shorter term. Most homeowners have a 30 year fixed mortgage which spreads your loan out over 30 years. A 15 year fixed loan would cut that in half reducing the time it will take to payoff the loan. With a 15 year loan your monthly payment will increase but you will be paying off the loan more quickly and will pay less interest in the long run. The downside to refinancing is that it will cost you. Typically each time you refinance you will have to pay closing costs.
Another option to paying down your mortgage faster is to make biweekly payments. By paying half of your monthly mortgage payment every two weeks you pay an extra payment each year. Paying the equivalent to an extra mortgage payment each year will take years off of your mortgage. There are all kinds of bi-weekly payment programs available and many of them charge so make sure you do your research before buying into one of these plans.
If you can’t commit a certain amount towards your mortgage every month then at least pay as much extra as you can. You might be surprised how much a few extra dollars a month can do for your mortgage in the long run.
Paying off your mortgage will have many long term benefits. You will be able to invest more for retirement or your children’s college education. You will be free to spend a little extra money on fun and vacations. Don’t give up!
