You don’t need to take 30 years to pay off your mortgage. Here are a few strategies that can help you pay more without breaking the bank.
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One of the best ways to get more equity in your home is to pay off your mortgage early. About 40% of Americans actually live without a mortgage, and that’s something we all strive for. Here are a few strategies to help you do this as well.
First, you can switch from monthly to bi-weekly payments. Instead of paying, let’s say, $2,000 once a month, you’ll pay $1,000 every two weeks. Over the year, you’ll pay $26,000 on your mortgage instead of $24,000 without even realizing it. You can get the same effect by making one extra payment per year. Doing this can knock seven years off of your 30-year term.
Bi-weekly payments are a good place to start.
Another thing you can do is round your mortgage up. If you have a mortgage payment of $1,986, make sure you pay $2,000. The extra amount each month will go toward your principal and further reduce the term of your loan.
You can also refinance from a 30-year fixed rate to a 15-year fixed rate. If you can afford it, this makes sense. You’ll be able to pay off your home in half the time. Even if you don’t switch to the 15-year term, a refinance can help you significantly lower your interest rate if the numbers are right. Be careful that you don’t refinance too much, though.
If you have any questions for me about paying down your mortgage or real estate in general, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.