What’s more rewarding than being the owner of your home? Perhaps being the owner of your home AND having your home paid off! What portion of your income goes toward your mortgage? Imagine having this money left in your account monthly. Yearly. In 5 years. What could you do with this money? Send a child to college? Create a bigger nest egg for retirement? Perhaps vacation more with your family? Below are a few tips for paying off your mortgage early.
Calculate how paying more each month will effect your payment time:
Sites like Bankrate.com offer mortgage calculators designed to show you how paying a little extra each month change the course of your loan. For instance, if your monthly payment is $644, just round up to $650. If you have a loan for $200,000, paying this extra $6 each month will actually save you 4 payments at the end of your loan!!!!One thing to be careful of when paying extra, is to speak with your mortgage loan holder and ensure the extra payments are being applied to the principal of your loan. If this is not specified, there is a chance that the extra money will just be set aside for the next payment. You’ll also want to ensure there are no prepayment penalties associated with your loan.
Set times each year to “double up”
Set aside four times a year to double up on your monthly payment. Be sure to honor this commitment, and make it a priority to be consistent.
Apply lump sums to your loan
If you receive an annual bonus through your employer, consider applying this towards the principal of your loan. You can also more than double up by applying your next tax refund to the principle of your mortgage. Be sure to frequently request statements from the bank, so that you are familiar with the amount left on your loan.
Apply unexpected funds to your loan
Receive an inheritance or settlement? Earn additional income from investments? Gain a major winning at the poker table. Wherever the extra money may come from, applying it to your mortgage is a great way to allocate additional funds .
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