Homeowners around the U.S. often struggle with paying off their debts. For most Americans, the biggest debt they carry is their mortgage. Those who want to be debt free quicker can do so by paying down the balance of their mortgage faster. There are a few different strategies for doing so.
Make an Extra Payment
One of the easiest things you can do to pay off your home loan faster is to make an extra payment each year. You can accomplish this a few different ways, but the most common way is simply to make an extra payment in full at the end of a calendar year. You should check with your lender to see what the protocol is for submitting payment above and beyond your regular payment. Many lenders require you to state where the extra money should go.
The other method of making an extra payment is to divide your monthly mortgage payment by 12 and add that amount to your regular monthly payment. For example, you have a monthly payment of $1,200 each month. Divide that by 12 and add the result to your regular payment to get your new payment of $1,300. At the end of each year, you will have made a sizeable extra contribution towards you total mortgage amount. Doing so can save you thousands of dollars in interest and cut years off of your term.
Refinance to a Shorter Term
You can always refinance your loan into a new one that has a shorter term. If you are currently on a 30-year fixed rate mortgage, consider refinancing into a 15-year loan. Your new interest rate needs to be lower than your current one, though. If not, you can achieve the same goal by just increasing the amount of your payment each month.
Make a Large Lump Sum Payment
Whenever you receive some unexpected cash, you can apply it toward your mortgage to pay down the balance. Maybe you receive a larger than expected tax refund or a bonus from work. You may even decide to take out a short term car title loan to pay off the balance of your mortgage. Embassy Loans has helped tens of thousands of customers get access to money for a variety of purposes. You can shave years off of your term and pay thousands less in interest when you make a large lump sum payment every so often. Take advantage of it when you can.