How to pay the mortgage quickly and in advance

Most people who achieve their dream of buying a home couldn’t be happier. However, the mortgage debt It is, for many, a stone in the shoe. After all, monthly installments are not usually the cheapest in the world, although they could be a little lower than rent. That’s why some homeowners are looking for ways to pay off their mortgage fast..

The reasons? They are many and range from removing the psychological pressure of having such a large debt to reducing what they would pay in interest. Of course, these aren’t the only ones: Retirees may also have a vested interest in paying off their mortgage early and early so they can fully enjoy their retirement income.

If you are one of the people who want to say goodbye to stress or simply put into practice a financial strategy that allows you to reduce how much you have to pay the bank in interest, congratulations! We have a special guide that will help you pay your mortgage in the shortest time possible and will show you how get out of a mortgage fast in less time in the United States.

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How to pay the mortgage quickly and in advance?

Arguably, the main benefit of paying off the mortgage early is the reduction in the amount of total interest associated with the mortgage loan. Even if you don’t see it now, this could be a more than substantial savings.

Think that the larger the capital owed, the more interest you will owe. If you need to know how much you pay in interest on your mortgage, and therefore, how much you could save if you pay it in advance, be sure to use the free bankrate calculator.

Whatever your reason for getting rid of those annoying monthly payments, we have the solution. Rather, we bring you Four infallible methods that will help you pay your mortgage in record time.

Keep reading: What is the interest on a Wells Fargo mortgage?

pay biweekly

There are two ways to make additional payments on your mortgage to speed up the payment process. The first one is to divide the monthly mortgage payment in half and make biweekly payments. By doing this, you will end up paying 13 (instead of 12) installments during the year. This tactic could be very easy to implement because it does not have a negative impact on the monthly budget.

Note: In order to opt for this option, you should first talk to the bank or credit union that gave you the mortgage. Some banks support it, while others do not. If your bank does not allow this payment method, you still have an option: save the money as if you had to pay your mortgage every two weeks and make a single extra payment. Thus, you can reduce the capital and interest subject to the loan.

always pay a little more

The second alternative to make extra payments is to raise the monthly amount you pay to the bank. This will allow you to quickly draw down principal, which can save you tens of thousands of dollars over the life of the loan.

For example, let’s say your mortgage loan gives you 30 years to repay and is for $250,000. The interest rate applied by the bank is 4%. If you make an additional payment of $100 per month to the principal balance of the loan, you’ll pay off the mortgage in 26 years instead of 30 and save $27,957. Not bad, right?

Note: This second option may be a better tactic than the one we will explain next, which is refinancing; since it does not commit you to a specific monthly payment. In other words, if for some reason you don’t have that extra $100 to pay this month, you won’t be penalized and your credit score it will remain intact.

Tip: Before implementing this payment method in your mortgage, talk to the bank! Some financial institutions neglect to inform borrowers that when they do this, they are paying the interest up front, and in this case, you would not be doing anything. You need the extra payment to reduce the principal and not be understood as 1) a payment for the next month or 2) an advance payment of interest.

#2 Refinance your mortgage loan

Refinancing your home loan so you can pay off your mortgage early only makes sense if you can get a lower interest rate. Take into account that there are fees associated with refinancing, so you should make sure that the new rate offered by the bank will compensate the cost of the process.

If you choose to refinance your mortgage to a short-term loan, that is, to go from a term of 30 years to pay to 15 years, could also help you to reduce the interest rate and, of course, to achieve the advance payment. Use the mortgage calculator of your choice or the Bankrate alternative to compare the payments and total interest of a 30-year loan to a 15-year loan.

#3 Restructure the mortgage loan

Mortgage restructuring is different from refinancing, which is the second method proposed in this guide. It is about keeping your loan as it is, but paying a lump sum to the principal so that the bank adjusts its amortization schedule and restructures the interest and payment schedule to the new remaining balance. This will result in a shorter mortgage loan and, therefore, faster to pay.

An important benefit of mortgage restructuring is that the rates will be significantly lower than refinancing.. Loan restructuring fees are typically a few hundred dollars. Also, if you have a low interest rate from the beginning, you will be able to keep it without problems. What if you have a high interest rate? Better, because you can reduce it until you reach a more attractive one.

#4 Reduce the main capital as much as possible

The last option on the list for paying off your mortgage fast and early is to make as many principal payments as you can. This strategy can be used by owners who receive a large bonus at work, a substantial inheritance, or who make a significant amount of money from the sale of a valuable item.

Since the VA and FHA loans cannot be refunded lump sum payments might be the best option. In addition, with this method you will save the bank fee for the refinancing of the mortgage.

Note: Remember to talk to the bank first to make it clear that the extra money you are paying is going to decrease capital.

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