Of all the bills you pay in life, the interest on your mortgage is probably one of the biggest. Taking even small steps today to pay off your mortgage quickly can save you a ton of money over the life of your loan and get you out of mortgage debt much faster - which means you'll have a lot more money to invest in your retirement, college funds, or use for fun stuff.
There's a reason the tallest towers in America's major cities are often occupied by banks: lending money long-term is extremely lucrative. For example, just the interest on a $200,000 30-year fixed mortgage at 6% is a whopping $229,528 over the life of the loan! Including principal, this $200,000 loan will cost nearly $430,000 to repay over 30 years. I don't know about you, but I can think of a lot of other things I'd rather do with $430K than send it to my banker.
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Learning how to pay off your mortgage quickly could put thousands - or tens of thousands - of dollars in interest back into your pocket that might otherwise have gone to your lender. If you're interested in finding out how to pay off your mortgage quickly, the following are some simple yet effective strategies you can implement today.
Get a Side Hustle to Make Extra Income - If you'd like to get a jump on paying down the principal on your mortgage faster, consider taking an extra job or starting a side business to generate extra income. You might be working harder now, but you'll thank yourself later when that mortgage is paid off years early. And if that side business becomes highly successful, you may find yourself with more financial freedom than you ever imagined.
Round Up Your Mortgage Payment - A simple way to pay down your principal faster, without busting the budget, is to round up your mortgage payment to the next hundred or thousand. For instance, if your mortgage payment is $1013/month, consider rounding it up to $1100, then automate it with an autodraft from your checking account to reinforce discipline. Unless you're running on an extremely tight budget, you probably won't notice your slightly lower disposable income.
Apply Budget Leftovers to Your Mortgage - If you're living on a budget, consider adding what's leftover in your budget at the end of the month to your mortgage balance. For instance, if you budget $500 for groceries and only end up spending $425, apply the extra $75 to your mortgage.
Do "Matching" Payments on Your Mortgage - Consider doing a "matching" contribution onto your mortgage for every dollar you spend in another budget area. For instance, if your plan is to pay down 25 cents of your mortgage for every dollar you spend on eating out, and you spend $100 on eating out in a given month, you'll pay down your mortgage by an extra $25 that month.
Snowball Other Payments Into Your Mortgage - If you're paying off other debts besides your mortgage, consider snowballing the savings into your mortgage. For instance, if you just paid off a car loan that had a $250 payment, consider applying what was your car payment to your mortgage payment. You'd be surprised how quickly you can pay off your mortgage using this strategy.
Make Lump Sum Payments At Bonus or Tax Time - If you're getting a healthy bonus or tax refund, apply it to your mortgage instead of spending it on stuff. Consider it an investment in your financial future that will reap huge dividends down the road.
Make Biweekly Payments - If you're lender allows you to, consider setting up a biweekly payment plan for your mortgage, which will result in a full extra payment being applied to your mortgage every year. However, make sure they don't insist on ripping you off by making you pay for the privilege of making biweekly payments on an ongoing basis. If your lender doesn't allow you to make biweekly payments or they charge a fee, you can achieve the same result by adding an extra 10% to your regular mortgage payment.
Refinance for a Lower Rate and Shorter Term - With interest rates so low right now, a refinance for a lower rate and shorter term could greatly accelerate the payoff of your mortgage. However, make sure the new loan truly benefits you. Just because you're getting a lower rate doesn't necessarily mean you're saving money in the long run if you have to pay a lot of fees or you don't have much interest left to pay on your current loan.
It isn't a mystery how to pay off your mortgage quickly, and the dollars you'll save is real money that you can use to save for retirement, invest in a college fund, or spend on that vacation you've always wanted to take. Taking some simple steps today to pay off your mortgage quickly could put tens or hundreds of thousands of dollars (depending on how large your mortgage is) back into your pocket instead of lining the pockets of your mortgage lender.
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