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How To Pay Off Your Mortgage Early

Are you looking to pay off mortgage early? Or as early as in 5 years? If so, then follow these tips. Your monthly mortgage payment might your biggest monthly expense in your budget right now. So the sooner and quicker you can pay off your mortgage, the sooner you can start experiencing true financial independence.  Follow the following six steps to learn how to pay off your mortgage faster.

Wondering how paying off your mortgage early can affect your overall financial plan? Talk to a local financial advisor.

1. Refinance your mortgage.

One of the steps you can take to pay off your mortgage faster is to refinance your mortgage loan. In the simplest term, refinancing your mortgage means that you get a new loan to replace your current mortgage loan. Refinancing can help you pay off mortgage early in two ways.

The first way is that you can get a mortgage loan for a shorter term and make higher payments and thus reduce the number of years it would take you originally to pay off your mortgage. Second, when you refinance your mortgage, you can get a loan with a way better and lower interest rate, provided that you have a good credit score.

So if you’re looking to refinance your mortgage loan to get a lower interest rate, it might be worth looking into learning how to improve your credit score.

2. Make Extra Mortgage Payments.

A mortgage, like any debt, is something that you have to pay. So, in addition to making your monthly mortgage payments on time, make extra payments whenever possible. Making extra mortgage payments is one of the easiest ways to pay off mortgage early.

When you make extra payments on your mortgage loan, not only will you get rid of your debt faster, you will also save tons in interest payments. The logic behind it is this: the more money you owe, the more interest you’ll pay.

If you don’t make extra payments, the interest in your mortgage loan will build up and you will end up paying interest on interest. By making extra mortgage payments, you will be able to pay off your mortgage early. 

One word of caution though, before you start making extra payments, check with your loan to see if you’re allowed to do so without incurring any extra fees. You may not be allowed to make extra payments on a mortgage loan with fixed rates.

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3. Set a pay off mortgage early date.

Use an online mortgage calculator to have an idea when you can pay off your mortgage loan. The mortgage calculator will tell you when you can expect to pay off your mortgage and how much you need to pay every month to reach that goal.

4. Make Extra Money.

Your paycheck from your current job may not be enough to consider making extra repayments on your mortgage.  With your monthly expenses, you may not have any money left at the end of the month.

So making extra money by doing side hustles or completing surveys can help pay off mortgage early. Here are some ways to make some extra cash.

5. Watch your spending habits.

Start watching your spending habits, including avoiding impulse buying. See if you can cut back on unnecessary expenses like monthly cable bills, subscription magazines, stop eating out and buying new things. That extra money can go towards your mortgage payments.

6. Make a lump sum payment.

If you receive a bonus at work, or a tax refund, use some or all that cash towards your mortgage. 

In conclusion, paying off your mortgage early can save you thousands. So it’s a good idea to work on it.

Working With The Right Financial Advisor.

You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

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