How to Pay Off Mortgage Early: 5 Tips for Paying Off Your House Early

You’ve finally found the home of your dreams, and you’ve taken out a mortgage to help you finance it.

You’ve always had clear and realistic financial goals, but lately, you’ve realized that the length of your mortgage will likely make it much more of a challenge for you to achieve them.

You’re interested in learning what you can do to pay off mortgage early — without getting yourself into financial hot water.

This post is here to help.

When you’re ready to learn how to pay off mortgage faster, and how to do so the right way, keep reading.

1. Prioritize Your Debt

It might seem counterintuitive when it comes to understanding how to pay off your house faster, but often, it’s smart to make your mortgage debt the very last kind of debt you pay off.

The average American citizen currently has about $38,000 in debt — and that number excludes home mortgages.

It’s tough to pay higher amounts if you still have to worry about things like credit card debt, short term loans, your student loans, and any other personal loans you’ve taken out in the past.

Plus, most mortgages don’t have nearly as high of an interest rate as other kinds of debt. You also need to be certain that you’re saving for retirement and other life goals.

In other words?

Start the process by determining if paying off your mortgage early is both feasible and the smartest financial decision for you right now.

2. Start Small

Especially at the beginning of your new commitment to pay off mortgage early, we know it’s tempting to make extra payments whenever you can.

But you want to ease yourself into these extra payments so that you can adjust to how losing a bit more of your disposable income will fit into your overall budget.

Start by committing to make one extra payment for the first year. This will help you to increase your home’s equity, lower your overall loan term, and of course, knock down that principal balance.

Check with your amortization schedule and use this amortization calculator.

This will help you to understand how even just making that one extra payment will impact your mortgage schedule and payments.

If you can afford to make payments more often, excellent — but still, go slow. We suggest making one extra payment every fiscal quarter and increasing from there if possible after the first year.

Of course, you absolutely need to be certain that you’re making your extra payments towards your principal balance.

3. Refinance Your Mortgage

Whether you’ve applied for loans for mixed use developments, or if you’re trying to pay off a standard mortgage, remember that refinancing is always an option.

Often, it’s a good idea to refinance your mortgage to a shorter-term loan.

For example, if you’re currently working with a 30-year loan, consider making the switch to a 15-year mortgage or even a 10-year option.

Yes, this means that your monthly payments will be higher. So, as always, take a hard and realistic look at your finances before you make this move.

But it also means you’ll be able to pay off a mortgage much earlier than you initially thought.

However, if you are considering refinancing your mortgage, do make certain that it will give you a lower interest rate. If it doesn’t, then it likely just isn’t worth it.

4. Consider a Lump Sum Strategy

Have you recently inherited some money from a relative? What about that end of the year bonus you got at work? Maybe you’ve generated some nice returns on an investment in your portfolio.

And of course, think about the income you may get from a tax refund, too.

Before you “treat yourself” to designer clothes or that luxury vacation?

We suggest that you consider making a lump sum payment to your mortgage, instead.

Sure, it means sacrificing your week on a yacht, but it also means much less financial anxiety in the long run.

The only thing you need to think about here is that your payoff date will likely remain uncertain. After all, most of us can’t exactly pin down when we’re likely to come into some extra cash.

Still, anything that knocks down your principal balance is always a good thing.

5. Budget

If you want to avoid taking out a second mortgage, or if you just want to pay down your mortgage early, budgeting is both the easiest and the hardest way to make it happen.

Start with the basics. Get rid of subscriptions you don’t really use. Resolve to cut your entertainment budget by 1/4 of your usual spending each month. Consider getting a side hustle, or even selling some of your old belongings.

Print out your bank statements and learn what you’re spending your money on — and how you can save more of it.

Pay off Mortgage Early with These Tips

If you want to pay off mortgage early, remember that it will take both sacrifice and calculated planning.

In many cases, one of the best things that you can do for yourself is to meet with the lender or a professional financial advisor. Together, you should sit down and prioritize your debt, look for ways you can slash your current spending, and understand the financial benefits and consequences of paying off a house early.

Are you interested in getting additional financial advice?

Want to know what you should look for when you’re ready to meet with a mortgage lender for the first time?

We’re here to help you with all that and more.

Keep checking back in with our blog to ensure that you continue to make smart financial decisions — and get closer to finally being debt free.

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