Tips for Paying Off Your Mortgage Early

The idea of owning your home outright is appealing, but not always something that people think about seriously in today’s more mobile world. However, if you have purchased one of the homes in Grand Forks ND, which you can imagine making your forever home, here are some tips on how to speed up your mortgage payments to claim ownership outright as soon as possible.

In the early stages of your mortgage, you may be paying mostly interest rather than principal. However, if you can make extra “principal only” payments each month — even just $25 a month — that can quickly add up in savings. Not only are you lowering your principal, you’re lowering your interest payments as the principal declines. However, you need to make sure you’re allowed to do this. Some lenders only allow it at certain times of the year or they may charge prepayment penalties. Still, even if it’s only allowed once or twice a year, save up that money monthly to make the most of those opportunities.

Another option is switching to bi-weekly payments. If you’re paying $2000 a month, don’t just pay it all at one time; split it up into $1000 payments every other week. At the end of the year, you’ll have made an extra full monthly payment, going by weeks, rather than months, due to the nature of certain months being longer.

Perhaps you initially purchased your home with a 30-year mortgage, but have benefited from raises and promotions and can now take on a higher monthly mortgage payment. If that’s the case, consider refinancing to a 15-year mortgage. That will significantly reduce the amount of interest you pay over the life of the mortgage. Plus, shorter-term mortgages often have better fixed interest rates. Just make sure refinancing is worth it in the long run and be aware of any fees involved in refinancing.

Of course, there are always smaller savings here and there that you can make to put toward your mortgage payments. Buying that expensive coffee or lunch out every day certainly adds up and could put a dent in your mortgage payment if you were to save it instead. Even saving just $4 a day — skipping the fancy coffee just on work days — nets you around $80 a month. Add that to your monthly payment and you’ll see significant interest savings and a shorter loan life.

While it’s great to be able to pay off your mortgage on your homes in Grand Forks ND earlier than planned, make sure you’re not pouring all of your money into your home if it’s leaving you cash-strapped for emergencies. Find a good balance between paying off your mortgage and creating a solid savings so that you can relax and enjoy your beautiful home.

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This post was written by Crary Real Estate