According to best-selling author and financial guru Dave Ramsey, more than 20 million Americans own their homes outright. If your goal is to join their ranks, there are a number of ways you can achieve it.
Let’s explore some of the options…
1. Making extra payments
There are several ways you can make extra payments. Consider doing one of the following options, or doing a combination of them.
- Make an extra payment each quarter (4 extra payments/year).
- Divide monthly payment by 12 and add that amount to each monthly payment (adds up to 1 extra payment/year).
- Pay half of your mortgage payment every two weeks – aka biweekly payments (this also adds up to 1 extra payment/year).
- Make an extra payment whenever you can. If you receive a bonus at work, tax refund, or win a sweepstakes, consider putting that extra money toward your mortgage. Just be sure to have your lender apply it to your principal balance.
2. Rounding Up
Round your mortgage payments up to the nearest ten, twenty, or even fifty dollars, so that you’re paying at least a few dollars more each month.
For example, if your monthly mortgage payment is $930, you could round it up to $950, putting an extra $20 toward your mortgage per month ($240/year).
3. Refinance to a Shorter Term Mortgage
Refinancing into a shorter term mortgage will most likely make your monthly payments increase, but it will help you pay off your loan much sooner.
If you can comfortably afford the higher payments, and if you can lock in a lower interest rate, then refinancing into a 10, 15, or 20 year mortgage could be a great decision.
You may be surprised to find out that even making a few additional payments a year can really help reduce your mortgage balance sooner. If you want to crunch the numbers and see exactly how making extra payments will affect your mortgage, please contact one of our loan professionals.
Owning a home outright can be a huge accomplishment and a tremendous weight off one’s mind. Not to mention paying down your mortgage may make more sense than investing in today’s unpredictable stock market. That being said, please bear in mind that we at Luxury Mortgage are home financing professionals, not personal finance experts. Please consult a financial advisor before developing a strategy for paying down your mortgage.
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