Mortgages might be some of the biggest loans in an individual’s lifetime. They are a huge obligation that can cause financial strain on people. Imagine you get into some personal financial issues which take away your ability to make mortgage payments; what would you do? For such circumstances, you must know how to pay off a mortgage quickly!
There can be myriad reasons for a person to pay-off mortgage quickly, which includes future preventive measures. Imagine if you lose your job in the future or lose your savings due to any accident, death, health bills; how would you pay for your mortgage payments. Therefore, future anticipations cause an individual to take action and get rid of their hefty obligations.
Similarly, some people might anticipate a disability in the future due to their unsafe job conditions. In such cases, people might be afraid of losing their job and boosting their payment options to pay off this massive debt quickly.
How to Pay off a Mortgage Quickly
Now, we’ll be looking at several ways to help you discharge your mortgage quickly.
Increasing Mortgage Payments Frequency
Rather than making monthly payments, you can try and make payments twice a month. In this way, you’ll be able to pay your mortgage in just half the expected time. As a rule of thumb, paying twice a month will reduce 1-3 years from a traditional 15 years mortgage plan. However, not every lender offers this option.
Check up with your lender and see whether they accept bi-weekly payments.
Try to Refinance Your Mortgage
Refinancing is a strategy by which you take another loan at new terms and payout your old mortgage. Therefore, you can refinance when a particular lender is offering low interest rates. By refinancing, you can take advantage of low monthly interest payments. Besides, you can even shorten the loan-term period when you refinance your mortgage.
Make One Extra Payment
You can also slightly impact your payment period by making one extra payment each year. For example, suppose your monthly mortgage payment is $1200; therefore, you can make a payment of $1100 each year. In this way, you can save on a month every year, and in 12 years, you can even save up a year on your mortgage payment.
It may sound like it doesn’t make a significant difference, but if you diligently want to pay off your mortgage faster, it’s one of the great ways, coupled with other methods.
Suppose you have a savings account linked to your mortgage account, or you receive an inheritance, and you’re in a position to make a lump-sum payment. You should choose this option because it amortizes your loan. You’ll have the same conditions and term period of your loan, but by directing a lump-sum amount to your principal balance, you can reduce monthly payments.
Similarly, you can offset your mortgage balance through your savings account. Again, this will reduce the principal amount and reduce your monthly payments.
Once you know how to pay off your mortgage quickly, you’ll pay it off in less period. However, once you are finally nearing the end of your mortgage, you’ll have to go through the process of paying off the mortgage. Firstly, you’ll have to send a pay-off quote to your lender 30-60 days before your loan to discharge the mortgage liability.
Coupled with interest and principal payment, you’ll also have to pay a final fee to end the obligation. The above mentioned are the great ways in which you can mortgage in less time. If you are looking to purchase homes, visit RateChecker.com and get free, customizable quotes.