Have you ever imagined a life without having a mortgage payment? You would go on that dream vacation, buy your dream car, or even invest in your children’s education. Paying off your house is a significant financial goal that most people strive to achieve before retirement, but one that seems so far-fetched.
Fortunately, it’s still possible to pay off your mortgage quickly and enjoy lower interest rates and a reduced repayment period.
Here are 12 simple ways to pay off your house ASAP.
Make Biweekly Payments Instead of Monthly Payments
A faster way to clear off your mortgage is to make biweekly payments instead of monthly payments. With reduced interest, more of the repayment goes towards paying off your loan’s principal. Making an extra payment annually reduces your repayment term by half. Some lenders will allow for biweekly payments but will require enrollment fees.
Refinance to a Shorter-Term Mortgage
Refinancing your mortgage allows you to choose a shorter term but may also increase your monthly payment. For example, if you previously had a 30-year mortgage, you can refinance your home and opt for a 20 or 15-year loan. Refinancing to a shorter-term mortgage means eliminating mortgage insurance premiums and enjoying a lower interest rate.
Get Extra Income to Increase Your Monthly Payments
You can also quickly repay your house by getting a side hustle to supplement your income. Use the extra income to increase your monthly payments and repay your mortgage. Paying extra monthly reduces your interest charges and shortens the mortgage’s term.
Cut Down on Your Spending and Redirect the Savings to Your Mortgage
Getting extra income may require you to apply for another job or start a business, which can be time-consuming. Going through your budget can help you identify areas to cut down on and use the rest of the money towards your house payments.
Find some expenses you can reduce, like dining out every week, lowering your grocery budget, shopping for expensive brands, or cutting down on subscription services. Cutting back on unnecessary items will give you more money to make more significant payments on your mortgage monthly.
Make Extra Payments if You Get a Windfall or a Bonus
Use any bonuses or cash windfalls to offset your principal balance. That wil reduce the interest on your loan and shorten your mortgage term. Note that you should specify to the lender that the money goes towards the principal payment.
Otherwise, they may redirect it to your upcoming loan payments, including pre-scheduled interest charges. Be sure to specify this to avoid confusion.
Consider Downsizing to a Smaller Property
If you currently own a big property that’s not in use, you can downsize to a smaller, affordable house to pay off your mortgage faster. The profits you get from selling your big house will allow you to pay off your new home. You also end up reducing your mortgage debt and enjoy lower monthly payments.
Consult a real estate agent to determine if selling your current house and purchasing a new one is possible.
Negotiate With a Lender for Lower Interest Rates
Negotiating with your lender for lower interest rates can help you pay off your home loan sooner and reduce your mortgage repayments. Do your research to determine the current rates your lender offers new customers.
With a better idea of the available interest rate, you can confidently negotiate with your lender for better interest rates. Some lenders may be open to lowering their rate or maintaining it if you are refinancing with your current lender.
Do Your Research on Equity Accelerators
A mortgage accelerator program is a type of mortgage loan program that combines a checking account and a home equity loan. These programs promise to help homeowners repay their mortgage more quickly than a conventional loan.
With equity accelerator programs, you get to pay your mortgage every two weeks instead of monthly. That reduces the monthly payments as these extra payments go towards lowering your principal balance rather than paying off interest.
Participate in Employer Mortgage Programs
Take advantage of employer-sponsored mortgage programs like mortgage subsidies, employer-sponsored loans, and down-payment assistance that can help you with the monthly mortgage payments.
Some employer-sponsored loans have low interest rates or flexible repayment options, which can be perfect if you’re looking to refinance your existing mortgage. Research the available programs to understand the requirements and maximize the benefits offered.
Allocate Tax Refunds to Your Mortgage
You can make extra payments towards your mortgage by using your tax refunds to make a lump sum payment. For example, making an additional payment of $4,000 annually has the same effect as making a $350 extra monthly payment. You could pay off your loan 15 years early.
Take Advantage of Mortgage Recasting
Mortgage recasting allows you to reduce your monthly repayments without refinancing your mortgage. This works by making a lump sum payment towards the principal balance. Your lender then reamortizes the loan to reflect a lower balance. With mortgage recasting, you can reduce your monthly payments and interest over the mortgage’s term.
Consider Renting Out Space
Do you have an extra room in your home to rent? Renting out any additional space in your home can help you pay off your mortgage quickly. Consider listing your available property on Airbnb to make some extra money that could go towards your mortgage payment.
Implementing some of these steps can help you pay off your house quickly. However, while paying off your mortgage earlier might make financial sense, sometimes it’s not always a great idea, depending on your financial situation. Always consult a financial advisor to determine if this is your best option.
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