An obligation to a financial commitment is stressful. Even if you are financially solvent and have no problem in paying your loans and mortgages, every homeowner is familiar about the mental strain the monthly mortgage payment can inflict on them.
The mortgage term is fixed and it can be short-term or as long as 30 years. The term is usually fixed during the approval of the loan, but you can still speed up the process to see yourself mortgage-free before the due time.
Check out the following tips to know how you can pay off your mortgage early:
Refinancing the Mortgage
It may seem daunting at first look to cut the term of your mortgage in half or several years, but the benefits will pay off in the long run. For example, if you refinance a 20-year loan into a 10-year one, you will not only shorten the payoff time but will also have to pay a significantly less amount of interest over the period of the loan.
However, the refinancing will also give you the responsibility of paying a higher monthly payment. So, don’t apply this technique if you don’t have a secure source of income for paying that amount of money regularly.
Refinancing with the Same Monthly Payment
It will be safer than cutting the loan term to half and starting to pay a much higher monthly payment than the current one. Do your research and refinance the mortgage into a term where you will pay a lower interest rate but the monthly payment will be same or close to the current one.
You have to spend some money to pay for the closing costs for refinancing, but the revised interest rate should negate the costs.
Use Unexpectedly Received Fortune
If you are unable to cover the refinancing costs and there’s no opportunity to increase your monthly income, you can use any unexpected good fortune such as money won in a lottery, inheritance, or bonus checks to pay off a portion of the mortgage. It still means spending a large sum of money to wipe out that big financial responsibility but paying this way won’t put any strain on your monthly budget.
Add to the Principal Payment
Adding to the principal payment, even just a small amount, will not only cut the total amount of interest paid but also shorten the mortgage term. Adding just $50 or $100 to your current monthly payment will yield magic in the long run.
Choose a method that suits best your financial conditions. The best way will be to refinance the mortgage into a shorter term go for other ways if you are not confident about your monthly income.