For generations, homeowners would buy a home for life. Working over the years to make the payments and celebrating the end of the 30-year mortgage were great milestones in the family.
Today, few homebuyers expect to be in their home for longer than 7 years on average. Therefore, paying off a 30-year mortgage seems like an impossible task. Fortunately, there are great ways to pay off your loan which do not involve time. Here are a few tips for paying off your mortgage loan faster.
- Biweekly Payments – Work with your lender to determine how they handle biweekly payments. If processed immediately, you can save 8 years of payments on a 30-year loan.
- Extra Payments – By making just one extra payment each year, you can pay off your loan 11 years earlier.
- Refinance to 15 years – There are great interest rates available for mortgage loans. Consider a 15-year mortgage.
- Principal Reduction – Watch for ways to add to your monthly payment a little at a time. When possible, increase the principal payment you make.
Paying off your mortgage builds wealth. Consider your life goals, including retirement. A 30-year loan taken out at 37 years old will not be complete until 67 – retirement age. The loan needs to be part of your overall financial plan from the beginning, and making payoff a priority with a few simple steps can add up to huge savings in interest, which can then be used for better investments.