It is pretty much everyone’s dream to own a home. So, when this dream becomes a reality, another dream immediately takes its place—how can this house be paid off in the fastest time? This is a question that most of us ask ourselves when we send the first mortgage payment to the mortgage company or to the bank. Often times, the reality of paying a mortgage payment for the next thirty years makes us want to do something about it, and that something is to pay off the mortgage as early as possible.
So, how do we go about paying off the mortgage at the fastest possible time? There are simple strategies to follow in accomplishing this task. We will explore four of them in our discussion.
First, before signing off on any mortgage loan, make sure that there is no penalties for paying extra money each month, in addition to paying the monthly mortgage. Many lenders penalize borrowers for doing just that. Paying more than the normal mortgage payment each month is a great strategy for paying down the principal of the mortgage.
Second, set up a bimonthly payment plan with the mortgage company, especially if it is every two weeks that the paycheck rolls in. This way, it will be easier to stick to the budget. It is always easier to make small payments every two weeks than to make one large lump sum at the end of the month. It is less intimidating doing it this way, especially if one is a first-time owner. Keep it simple and one will experience better success. In addition, paying every two weeks or bimonthly will cause one to pay an extra month’s mortgage every year. Instead of paying for 12 months, one will end up paying for 13 months, at the bimonthly pace.
Third, utilize job bonuses and raises from career advancements to pay toward the mortgage. Any extra dime or nickel should be sent to the mortgage company to help pay down the mortgage.
Finally, like a detective, keep a watchful eye on interest rates. As soon as they fall, jump on them and refinance to a lower mortgage rate and shorten the term of the mortgage, if at all possible. Just try not to keep the term the same while taking money out. Such move could be disastrous. While refinancing, switch the mortgage from a 30-year fixed rate mortgage to a 15-year fixed rate, if one already has a fixed rate mortgage.
The interest rate is a lot lower at 15 years than it is at 30. The disadvantage is that one will end up paying more each month with the 15-year option. But, this is to be expected. The bright side is that the mortgage will be paid off at the fastest time. If one has an adjustable rate mortgage, he or she should refinance and switch to a fixed rate mortgage. Fixed rate mortgages don’t fluctuate up and down with the national interest rate as do adjustable rate mortgages.
Yeah! It is everyone’s dream to own that magnificent home, but reality sets in when the first month’s mortgage payment is due–how can we payoff this mortgage in the fastest possible time? Thirty years is a long time for paying off a loan! These are things that some of us first-time home buyers utter when we finally set foot in our dream home and begin to make payments!