Do you ever dream of paying off your mortgage and owning your home free and clear? What immense freedom that would be! For many homeowners, this reality may feel like a far-off dream, especially with the cost of real estate nowadays.
But, like all dreams in life, they are worth working for – and paying down your mortgage is no different. To help you pay less interest and own your home faster, consider implementing these changes to make your mortgage disappear sooner than you ever expected.
1. Negotiate your interest rate
All lenders post their interest rates for the various mortgage products that they offer, which is very helpful when researching your options. Do not be afraid to negotiate for a lower mortgage rate because even a few percentage points will make a big difference in the long run. Also, consider meeting with a mortgage broker to see what they can pull together on your behalf. You could save a bundle by shopping around.
2. Adjust your payment frequency
Some homeowners prefer a monthly mortgage payment because it’s predictable and easy to budget. However, changing your payment from monthly to bi-weekly will result in additional payments every year, helping you pay your mortgage down faster, cost you less in interest and have you owning your home sooner without much impact on your overall budget.
3. Shorten your amortization period
The amortization period is the amount of time required to pay off your mortgage, including interest. The shorter the amortization period, the less interest you will pay over the life of your mortgage. You can reduce your amortization period simply by increasing your regular payment amount, which is recommended if your income increases. Your monthly payments will be higher, but the trade-off is that you'll be mortgage-free sooner. Find out how much you could save by shortening your amortization period with this mortgage payment calculator.
4. Make lump-sum payments
Depending on your lending institution and your mortgage terms, you may be able to make lump-sum payments, which go directly to your outstanding principal. A great way to do this is by using extra cash, like a tax refund, inheritance or work bonuses, to pay your mortgage down faster. Be sure to consult with your lending institution to find out what your prepayment privileges are.
Do you need a mortgage expert? Please contact me, Deborah Clerk, Real Estate Sales Representative, ASA, with Keller Williams Realty Solutions, Brokerage, and I’ll connect you with trusted professionals so that you receive the best mortgage advice to help you own your home sooner.
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