For most people, a home mortgage is the largest debt they have – and the largest debt they will ever take on. If you own a home, you would certainly love to pay down your mortgage as quickly as possible.
But is there really anything you can do to get rid of this debt faster? While it might seem like a huge mountain to climb, you can take some steps to speed up the process of paying off your mortgage.
Let’s take a look at three options that you may wish to consider.
Find Room for Additional Payments
If you are able to make additional payments on your mortgage during the course of a month, those payments are going to be applied directly to the principal of the loan. Obviously, you will need to have room in your budget for these extra payments, but if you do, they can dramatically change the long-term outlook of your repayment schedule.
These additional payments are powerful because they are not reduced by interest expenses.
For example, let’s say you have a monthly mortgage payment of $1,000, with $500 applied to the principal and $500 applied to interest. If you can add another $200 per month to that payment, you will be able to reduce the size of the debt by an extra $2,400 in just one year.
Your numbers will vary, of course. But, it’s easy to see how these payments can be a powerful way to build equity.
Take Out a Smaller Mortgage
Many people live in a larger house than they really need to accommodate their lifestyle. If you have a big family, you may actually need that big house. But, the typical married couple with two kids probably doesn’t need to live in a mini-mansion.
By purchasing a smaller house, or buying in a more affordable area, you can take out a smaller mortgage and likely pay that mortgage off faster.
In fact, buying a less expensive home may allow you to take out a 15-year loan, as opposed to the 30-year mortgage that is so common. You’ll wind up paying less interest on a 15-year mortgage, making your house even more affordable in the long run.
Pick Up Extra Work
For those who are particularly motivated to pay off their mortgage early, picking up a part-time job may be a viable option. For instance, you may decide that you are going to work a few hours on the weekend. Or, you may have the ability to do some extra work from home in the evenings.
Assuming the rest of your budget is already in good shape based on your regular income, you may decide to direct all of the money from your other job toward making extra mortgage payments. Going in this direction is going to require discipline and hard work. But, it will feel good when you see that mortgage balance dropping steadily.
Paying off your mortgage early may seem far-fetched at first. But, taking these small actions regularly can help you pay it off earlier than you think.
Are you trying to pay your mortgage off early? What are you doing to make extra payments?
Photo courtesy of: DebbieHalcomb