Tips to Pay Your Mortgage Off Early

If you are like most people, your mortgage is your biggest expense every month. In fact, it probably takes up a big chunk of your monthly budget.

Because of that, most people dream of a time when they don’t have a mortgage. Though it feels years (or even decades) away, there are some ways to pay it off early.

Here are some tips to pay off your mortgage early.

Buy an affordable house. Unfortunately, most people get pre-approved for a home they can barely afford. If they buy a home at the top of their limit, they may feel “house poor” where almost everything they make goes into their mortgage with no money left for anything else.

If you don’t spend too much on your home, you can easily put more money toward your mortgage every month. In fact, many people recommend buying a home that they can afford on one income. Not only can you pay more every month, if one person needs to stay home to raise the children, but you can also do so easily.

Refinance. One of the best ways to pay off your loan early is to refinance to a shorter term. Many mortgage lenders offer a ten or fifteen-year loan. Though your monthly payments may be higher, you may have a lower interest rate.

In the long run, you will pay off your home sooner (and pay less due to the lower interest rate) when you refinance. However, make sure that you can get a better interest rate, or it isn’t worth doing this.

Make sure that you are ready to pay off your mortgage. You need to understand the math when trying to get out of debt. Before you pay off your mortgage, you need to pay off your most expensive debts first. For most people, this includes high-interest credit cards and short-term loans (student and car loans).

Once your other debts are paid, you can start working on paying off your home. It doesn’t make sense to spend ten years paying off a credit card when you paid your home off five years early.

Put extra money toward your mortgage regularly. While some people try to put some extra money toward their mortgage every month, others prefer to make an extra payment at least once a year to help them pay it off sooner.

Don’t worry if money is too tight to spend an extra hundred dollars on your mortgage each month. Every little bit that you can put toward it will help. You may want to put your tax refund toward it. If you get a bonus from work, you may also want to put that toward it. Any little extra that you can put toward your mortgage will help.

Though you may not be worried about paying off your home earlier, you should think about how much you are paying in interest each month. Even if you are able to pay it off a year or two sooner, you could be saving several thousand dollars in interest.

Because of this, you should refinance so that it gets paid off sooner. You should also try to pay a little extra every month. If you get a bonus or come into some extra money, you should put it toward your mortgage loan. It all adds up, and you might have your home paid off sooner than you ever imagined. However, before you do that, you must ensure that your other debts are paid off. There is no point in paying off your home if it will take you ten years to pay off your credit card bills!

Previously published on Medium and/or Newsbreak.