Just because you have a 30-year loan doesn’t mean you have to be well into your 60s or 70s paying it off. These tips can help you cross the finish line early.
No one wants to spend longer than they have to paying off their mortgage. The fastest way to pay off a mortgage faster is to get a shorter-term loan, like getting a 15-year instead of a 30-year. But that means higher monthly payments that not everyone will be able to afford. So how do you fix your budget with a loan you can afford and still pay it off early? Here are a few common approaches to this problem.
A biweekly plan is the easiest way to shorten your mortgage without ruining your finances. This plan shaves about four to five year off your mortgage as you make half your payment every other week.
This means you’re making 26 payments, which is the equivalent of 13 monthly mortgage payments per year instead of just 12. The normal budget can absorb this blow because you are still paying your mortgage, only cutting in half every two weeks.
Increase Monthly Payment
If you can afford to pay more than a biweekly payment, you can opt to do so by increasing your monthly payment amount. Paying an extra $200, $300, or even $400 a month can shave off up to ten years on your mortgage!
If you can still afford more, you may want to consider a fifteen-year loan as they shave off about $100 a month off your monthly payment.
Mortgages may seem like stressful contracts to obtain, but with the right preparation, they don’t have to be! Contact Dean Rathbun when it comes time to finding the perfect plan of action to buy your home. We are happy to help you.