Although the average mortgage in the United States is about $ 200,000, you don’t have to spend 30 years or more to pay for your home. Check out these real tips to help you pay off your mortgage in advance. (iStock)
Thirty years is a long time, but it is the most common mortgage payment term in the United States. According to Experian, the average mortgage debt among Americans is $ 215,655. While a lot of money is hanging over your head, there are several solutions to consider if you want to pay off your mortgage balance quickly.
The quickest ways to pay off a $ 200,000 home loan include doing things like refinancing mortgages, making extra payments, switching to a biweekly payment schedule instead of monthly, or selecting a flexible loan term. Let’s take a closer look at each of these options:
- Refinancing Your Mortgage
- Change your mortgage payment schedule
- Pay another debt
- Hacking home
- Use your tax refund and unexpected earnings
If paying your mortgage faster sounds interesting, you can visit a market like Credible to check refinancing rates and compare mortgage companies.
How can I speed up the payment of the mortgage?
1. Refinancing your mortgage
Refinancing your mortgage can help you take advantage of today’s low refinancing rates and possibly pay your home early. You can potentially save thousands of dollars over the life of your loan with a lower interest rate and a shorter loan term.
When refinancing your mortgage, also consider changing the type of loan you have to help you achieve your financial goals. For example, a 5/1 adjustable rate mortgage could be an option that would provide a shorter term with a much lower interest rate. An ARM 5/1 usually offers a fixed interest rate for five years. After that, the interest rate is adjusted once a year.
Visit Credible to see loan refinancing options between multiple mortgage lenders and get pre-approved to refinance your mortgage in just minutes.
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2. Change your mortgage payment schedule
You don’t just need to make monthly payments on your mortgage. In fact, you can save several years of the life of your loan by switching to biweekly payments. Simply divide the mortgage payment in half and pay that amount every two weeks.
Some months are longer than others, so you may end up making three payments a month if you get paid twice a week. By the end of the year, you will have made the equivalent of 13 monthly payments.
You can also try to overpay for the principal balance. Budgeting an additional $ 200 or $ 500 on your monthly payments, for example, can help lower your mortgage balance.
If you want to refinance your mortgage before switching monthly payments, Credible allows you to view quotes from different mortgage companies without pulling your credit, so you can research and do due diligence before committing to anything.
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3. Pay other debts
If you want to pay off a $ 200,000 mortgage quickly, try to get rid of your other debt first. Whether you have credit card debt, personal loans, a car loan or student loans, start paying off all non-mortgage debt and this will free up a large portion of your income.
If the minimum payments on your debt (non-mortgage) add up to $ 600, for example, paying off your debt will release $ 600 per month or $ 7,200 per year. In addition, you will be adding money back into your budget for other financial needs and goals while focusing on paying off your mortgage.
Consider taking out a debt consolidation loan if you have multiple high-interest credit card debts. You can use the Credible payment calculator and compare rates and lenders for personal loans.
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4. Hack from home
Hacking a home is when you rent a part of your home and use the rent to pay your mortgage or supplement your bills. If you have a basement, extra room or extra space to rent, you may be earning money to help you pay off your mortgage faster.
If you are not interested in renting your free space to others, you can rent your garage or storage as a storage space for someone else and earn extra money that way.
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5. Use your tax refund and unexpected earnings
In general, unexpected earnings are extra money that you didn’t really expect. If you follow your budget and live off the income you earn, you can apply any unexpected gains, such as tax refunds or bonuses, to pay off your mortgage. Even if the unexpected profit just rounds off the mortgage payment to the next hundred dollars, putting extra money into the principal balance will help you save years on the mortgage payment.
SHOULD I PAY MY MORTGAGE EARLY?
It is possible to pay your mortgage in advance
Many people have paid the mortgage loan in advance and you can do that too. You just need a clear financial strategy that works for you. One of the easiest ways to start is to see if you can refinance your mortgage with a lower interest rate. Doing a mortgage refinance can put you in a position to save money and pay off your mortgage more quickly.
Make sure to visit Credible to compare rates and mortgage lenders and also get in touch with an experienced credit officer who can answer your questions about mortgages.