If you’re looking to pay off your home loan faster, there are a few things you can do to make it happen. Check out our tips and advice on how to make extra payments and save money on interest to help you pay off your mortgage sooner.
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If you’re like most people, your home is your single largest investment. It only makes sense to try to pay it off as quickly as possible, saving yourself a great deal of interest along the way. Here are some tips on how to make that happen.
The Benefits of Paying Off Your Home Loan Faster
Many homeowners are looking for ways to pay off their home loan faster. There are several benefits to doing so, including reducing the total amount of interest you will pay over the life of the loan and freeing up more money each month.
Additional benefits of paying off your home loan faster include:
-You’ll own your home outright sooner.
-You’ll have more equity in your home.
-You’ll be less likely to default on your loan if you experience financial difficulties.
-Your monthly housing costs will be lower.
How to Pay Off Your Home Loan Faster
Paying off your home loan can be a daunting task, but there are ways to make it happen faster. You can make biweekly payments, refinance to a shorter loan term, or make extra payments when you can. Let’s take a closer look at each of these methods.
Make bi-weekly payments
A great way to pay off your home loan faster is to make bi-weekly payments. Instead of making one payment a month, you can make two smaller payments every two weeks. This will help you pay down your principal balance faster and save you money on interest over the life of your loan.
To make bi-weekly payments, you can either set up automatic payments with your lender or make manual payments every two weeks. If you make manual payments, be sure to mark your calendar so that you don’t forget to send in a payment. You may also want to consider setting up automatic payment reminders so that you don’t miss a payment.
If you’re not sure if making bi-weekly payments is right for you, speak to your lender about other ways to pay off your home loan faster.
Make extra payments when you can
If you can afford to make extra payments on your mortgage, you should do so. Even an additional $50 per month can make a big difference over the life of a 30-year loan. To see how much, use a mortgage calculator and enter your loan amount, term (in years), interest rate and monthly payment. Then add an extra monthly payment equal to 1/12th of what you currently pay. Here’s an example: If your monthly mortgage payment is $1,000 and you have 20 years remaining on your loan, making an additional $100 monthly payment will allow you to pay off your mortgage five years and one month early, and save you more than $21,000 in interest.
Refinance to a shorter loan term
If you have a 30-year loan, you may be able to refinance to a 20- or 15-year term and still keep your monthly payment affordable. By doing so, you’ll pay off your loan faster and save money on interest over the life of the loan. You can also refinance from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage.
As you can see, there are several ways that you can go about paying off your home loan faster. By making small changes to the way you make your payments, or by making larger lump sum payments when you can, you can make a big dent in the amount of time it will take to pay off your loan. Talk to your lender about what options might be best for you, and remember to stay disciplined in your efforts – extra payments are only effective if you make them on time, every time.