Nearly 40 percent of the homes in the United States are mortgage-free. Some people become so accustomed to paying a mortgage monthly that they forget what life without them was like. Without a mortgage, you will have more money to invest in other properties or even your retirement.
Instead of waiting to win the lottery or receive an inheritance from a long-lost uncle, you need to work on paying off your mortgage now. While the amount you still owe on your mortgage may seem large, there are strategies you can use to pay off this loan quickly. The amount of hard work and effort you put into paying off your mortgage early will pay off in the long run.
Read below for some helpful tips on paying off your mortgage loan quickly.
Start By Choosing an Affordable Home
One of the hardest things for a new home-buyer to do is narrow down the selection of properties at their disposal. While you need to consider important factors like the size of the home and the neighborhood it is located in, you also need to focus on the affordability factor. Some first-time buyers tend to go all out on their first property purchase.
Buying a home that you can barely afford is a bad idea for several reasons. Instead of putting yourself in a financially compromised position, you need to find a home you can easily afford. The lower your initial mortgage loan amount is, the quicker you will be able to pay it off.
The ability to pay off your mortgage in 5-7 years starts by choosing an affordably priced property. Setting a firm budget before going out and look at the homes in your area can help you narrow down the selection in a hurry.
Paying Extra Can Help You Pay Off a Mortgage Loan Quickly
When looking at the various mortgage loans at your disposal, you need to focus on the interest rate and monthly payment amount being proposed. Ideally, you want to choose a mortgage loan that offers a lower monthly payment. Not only will this low amount make paying the mortgage easier, it will also provide you with the ability to pay more each month.
Instead of spending the extra money you have each month on frivolous purchases, you need to pay ore on your mortgage. Paying a bit extra each month can help you save money on interest in the long run and will also help you pay off your mortgage faster.
Before you start the process of paying more on your mortgage each month, make sure this will not put you in a financial bind. Devising a detailed budget is essential when trying to track every dollar you make, but luckily there are resourceful websites like LowerMyBills that provide all the free information you might need to achieve financial safety.
Work on Paying Down Other Debts
In a world where credit is so readily available, many people fall into the trap of using debt to acquire possessions. While taking out a car or a home loan is acceptable, using credit cards recklessly can get you in a lot of trouble. If all of your extra money is being swallowed up by monthly credit card minimums, now is the time to make a change.
Focusing on paying down your existing credit card debts can help you with your mortgage later on. The money you were spending on these minimums can be put towards paying your mortgage off faster. In order to make this debt payoff process work, you will have to be disciplined.
People who are serious about getting on good financial footing will have to make sacrifices. For instance, instead of taking extra money and going shopping, you will have to do the responsible thing and use it to pay debt. As time goes by, being financially disciplined will become easier.
Attacking the Principal of Your Loan
Most newcomers to the world of homeownership fail to realize how mortgages work. In reality, the first few years you pay on a mortgage will be spent reducing the interest on the loan. However, you can attack the principal of the loan by paying more regularly.
Just making your monthly minimum paying will not reduce the principal amount on your loan. Instead of just paying interest for the first few years you have a mortgage loan, you need to pay extra to reduce the principal. While this may not seem like it is helping at first, it will be beneficial in the future.
The lower the principal amount on your loan becomes, the easier it will be for you to pay off the mortgage early. Sacrificing now will help you reap the rewards of paying off your mortgage early in the future.
Use Your Tax Refund Wisely
There will be times when you receive large sums of money. One of the most common ways people receive these lump sums is by getting a refund during income tax season. Instead of running out and spending the money on foolish things, focus on being responsible.
Even if you only receive a few thousand dollars, you can put this towards paying off your mortgage loan. If you have a larger family, chances are you will get a sizable income tax refund. The best way to maximize the amount you receive is by working with an experienced and knowledgeable accountant.
Work Hard to Pay Off Your Mortgage
Now that you know more about how to pay off your mortgage loan quickly, it is time to take action. With some planning and hard work, you can accomplish this goal.
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