Seven Simple Ways to Pay Off Your Mortgage Early
Follow these tips to get closer to your goal of being mortgage-free
Most homeowners want to have their mortgage paid off as soon as possible, but getting there is no easy feat. There are plenty of ways, however, to strategically chip away at your balance and have it paid off in less time.
Make payments on a bi-weekly basis.
If you're like most people, you've been paying a monthly mortgage payment, but you can pay every two weeks reduce the balance faster. Make a half-payment every other Friday, for example, and you'll remain current on your payments while also getting ahead. By doing so, you'll end up making 26 half-payments in a year, or 13 full payments, as opposed to the 12 you would otherwise be making.
Make 13 payments a year
Even if you don't elect to pay your mortgage off on a bi-weekly basis, you can still achieve your end goal sooner if you make an extra payment each year. Find a month when you have fewer financial obligations and put some extra money into making one more payment on your home. As the years go by, this will add up significantly.
Whenever you have extra money, put it toward your mortgage
Another option is to simply put any extra money you have at the end of every month – or even every week – directly toward your mortgage. Download a mobile app to make payments if you haven't already, which will make this very convenient to do. When you get paid each pay period and figure out your budget, look at how much you have left over, and move it over to your mortgage before you have a chance to spend it on other things. Even if you don't have room in your budget to do this on a regular basis, consider the strategy for those times when you come upon extra money. Perhaps you received a bonus at work, for example. Put it into your mortgage, and you'll thank yourself later.
A relatively painless way to pump some extra money into your mortgage payments is to simply round up. Each time you make a payment, whether it's monthly or bi-weekly, round up to the nearest hundred if possible. If that's too much of a stretch for you, even rounding up to the nearest ten can help. If you pay $1,061 per month, try rounding up to $1,100. That's an extra $468 per year. Even you rounded up to $1,070, you'd be adding over $100 per year. If you combine the rounding strategy with one of the other aforementioned strategies, you will benefit all the more.
Cut back on other expenses
Take a long, hard look at what you're spending money on each month/week. What recurring charges can you eliminate? What extras are you paying for that you could do without? Could you save money on groceries by shopping at a different store? Are there loyalty programs you could enroll in to save money at certain stores, restaurants, or gas stations? Could you eat out less? Make your own coffee at home instead of frequenting Starbucks? Any expenses that you can eliminate or reduce can be translated into larger mortgage payments to help you get your home paid off more quickly.
Set a date and calculate
Try picking an ideal, yet realistic, date for when you would like to have your mortgage paid off, and work from there. Figure out how much you would have to pay each month, year, and week, to achieve this goal. Look at your budget and account for any expected fluctuations in available finances. Do some calculating and try your best to stick to a plan. Nevada State Bank has some mortgage calculators here.
Refinancing your mortgage is certainly an option worth considering. To get your home paid off sooner, you'll of course need to refinance with higher monthly payments, and it might help to talk to your lender about your options. Information on refinancing at Nevada State Bank is available here.
The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of Zions Bancorporation, N.A. Member FDIC