How to Pay Off a House Mortgage Early
Typical mortgages last a period of 30 years. If you don't purchase a home when you are young, chances are you don't want to wait 30 years to get your home paid off. Having your home paid in full not only provides financial freedom, it also frees up your money to be used in other ways. You can save for retirement, take that vacation you have always wanted to take or give more money to charitable causes. You can pay off your home mortgage early if you are willing to be diligent.
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Instructions
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Start adding an extra dollar each month to your mortgage payment. According to Good Housekeeping, you can pay your mortgage off years early by utilizing this method (depending, of course, on the total amount of your loan). The key is to increase the amount by $1 each month. For example, if you have a $700 mortgage payment, you would pay $701 the first month, $702 the second month, $703 the third month and so on through the years.
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Pick up everything in your home that you haven't used in the last one to two years and sell it. Send all of the money from the sale of your extra goods to the mortgage company. Make sure you designate that the mortgage company apply the extra money to your principal.
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Start sending biweekly payments. If your mortgage is $800 a month, for example, start sending $400 every two weeks. According to Good Housekeeping, you can set this up with your lender, but make sure you designate the that amount above the monthly mortgage payment is to be used toward the principal. This method sets you up to pay an extra mortgage payment each year, helping you achieve your goal of getting your home mortgage paid off much earlier than 30 years. Be aware that some lenders may charge a fee to switch you from a once-monthly payment to a biweekly payment plan.
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Consider refinancing your 30-year mortgage to a shorter term such as a 20- or 15-year mortgage. Your payments will be a little higher, but you will skip out on paying a whole lot of interest. This will help you achieve your goal of paying off your home mortgage in a shorter amount of time.
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Create a budget for your family. Commit to sending any extra money that remains at the end of each month to your mortgage company until your mortgage is paid off. For example, one month you may only have used $15 of your $50 entertainment fund. Another month you may only have used $400 of your $500 grocery fund. The extra money can be designated to bring down the principal of your mortgage.
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Tips & Warnings
You may want to get a part-time job in addition to your full-time job. Reserve the earnings from the part-time job solely for paying down your mortgage. This could help you get your home mortgage paid off quickly. Once you own your home outright, you can quit the extra, part-time job.
References
- Photo Credit house image by Earl Robbins from Fotolia.com
