How to Pay Off Your Mortgage Loan Faster

You know that buying a home costs money – but does homeownership burden you with a tremendous amount of debt that you’ll never pay off? Here’s what you need to know.

Does Buying a Home Mean You’ll Go Into Debt Permanently?

When you take out a mortgage loan to buy a home, that doesn’t mean you’re in debt forever. In fact, a typical home loan won’t last more than 30 years – so if you’re 30 now, you should have it all paid off by the time you’re 60. Sure, 30 years is a long time, but there are some things you can do to pay off your mortgage earlier.

Related: Is homeowners’ insurance mandatory?

How to Pay Off Your Mortgage Loan Faster

About 26.9 million Americans own a home outright. That means they don’t owe the bank a dime – they simply pay for annual property taxes, upkeep and repairs. Some of these people have fulfilled their mortgage obligations the exact way the lender wants them to: by making one monthly payment in an exact amount until the loan is completely paid off. But others have used a few tips and tricks to pay off their mortgages sooner.

You should always consult a financial professional before you make any major decisions, but here’s an idea of what some people to do to pay off a mortgage faster. (You should also note that some mortgage loans come with prepayment penalties; that means if you pay off your loan early, the lender will charge you a fee to make up for the additional interest you won’t have to pay.)

You may be able to:

  • Make additional payments on the principal
  • Make biweekly mortgage payments

Paying Off Your Loan Early With Additional Payments

When you make additional payments on your mortgage loan, let your lender know that you want them applied to the principal – that’s the amount you borrowed from the lender (not including the interest the lender is charging you). The principal you still owe is what determines how much your interest payments will be. Look at it this way: If you owe $1,000 in principal and must pay 5 percent in interest, you’ll be better off making a payment that drops your principal. A $100 payment toward the principal lowers your balance to $900, and owing 5 percent in interest on $900 is better than owing it on $1,000.

Related: Should you buy a fixer-upper in Lakewood?

Paying Off Your Loan Early With Biweekly Mortgage Payments

Biweekly mortgage payments are half-payments you make every two weeks. You’re still paying the same dollar amount every month. This strategy works for a lot of people because it knocks down your principal with each payment. However, you have to make sure your lender will allow you to make biweekly payments – not all lenders do.

Are You Buying or Selling a Home in Lakewood?

If you’re not already living in Lakewood, or if you are but you’re looking for a new home, we’re here to help. Call us right now at 562-882-1581 or start browsing our Lakewood real estate listings to find your dream home today!

You can also browse:



Post a Comment