The monthly mortgage payments are definitely a necessary evil. Mortgages are unavoidable under certain circumstances and the long 30 years of the amortization schedule seems to be so far. You always keep on day-dreaming about the fastest ways to eliminate the mortgage. If you really want to pay off the mortgage fast, the following article would provide the required help. It would enlighten you with certain ideas which are considered the fastest ways to pay off the mortgage. The total amount of interest to be paid by the borrower in the long years of the amortization schedule, often surpasses the original principal amount!! Use a mortgage calculator to check for yourself.
Hence, paying off mortgage in a faster and quicker way always saves the borrower from paying the huge amount of interest associated with a regular long term mortgage plan.
- Biweekly payments – Making biweekly payments instead of a single monthly payment is a very common practice. You split up your monthly payments and pay them bi-weekly so that you end up paying an extra payment every year and thereby, cutting of your amortization schedule by 6-8 years. But, you must check with your lender before going for this option as some of the lenders charge an extra fee for splitting the monthly payment.
- Paying towards the principal – In the early years of the mortgage payment, the major chunk of your payment goes towards the interest rather than the principal. Thus, early paying off mortgage becomes difficult. You may talk to your lender and always send some extra cash (whenever you get hold of some) specifically marked as an “extra payment towards the principal” and hence, making sure that it does not apply to your payable interest. You may pay it monthly (most beneficial), bi-monthly, once per quarter, once in every 6 months or even once in a year, as per your convenience. You must be specifically cautious about the effect it would create on the tax payments as the mortgage interests are tax-deductable. It is always advised to apply the amount of tax return you receive towards the mortgage principal. This is definitely a great way to quickly bring your loan down.
- Increase in payments – One of the easiest ways to pay off the mortgage faster is to increase your monthly payments by 1/12th of your minimum monthly payment. This small monthly increase would save at least 8 years from your total amortization schedule.
- Refinancing mortgage to a shorter term – When you refinance your mortgage term, say, from 30 years to 15 years, you not only reduce the amortization schedule, but also, may avail lower rates of interest as shorter term mortgages are always associated with a lower rate of interest. You may need to pay closing costs, etc. and your monthly mortgage payments would also be higher but, in the end, you would be able to get rid of the mortgage early.