How to Pay Down a Mortgage in 5 Years

If you make the right moves, you can significantly pay down your home mortgage debt in just five years.

Because mortgage payments can take a chunk of your monthly income, some homeowners look for ways to pay down their home loans. This can allow you to pay off the home loan early, or to build equity sooner to eliminate private mortgage insurance. Whatever the reason, there are different ways to pay down a mortgage. In fact, you can significantly reduce your balance in as little as five years.

Difficulty:

Moderately Challenging

Instructions

1. Refinance the mortgage loan. With a mortgage refi, you might be able to get a reduced home loan term, which will allow you to pay down the mortgage in five years. For the fastest pay-down, choose a 15- or 20-year mortgage term. Of course, your home's appraised value will need to cover the amount of your loan, or this option won't be viable.

2. Select a bi-weekly mortgage. Rather than pay your mortgage once a month on the first, opt for a bi-weekly home loan and send half payments every two weeks. This reduces the interest you pay, and you can significantly pay down your mortgage in five years--and completely pay off a 30-year fixed mortgage in 23 years.

3. Double your monthly payments if you have a financial cushion. Consider doing this every month or every other month. Send two separate checks. Write "principal only" on one check. That way, your lender will apply the entire amount to your mortgage balance.

4. Increase your disposable income. Look for second employment or reduce frivolous spending, such as shopping, dining out and vacationing. This will increase your disposable income, and you can use this money to pay down your home loan.

Resources

• Bankrate.com: Mortgage Refinance Calculator