Do you have a 15-year, 30-year, or soon-to-be mortgage with your name on it? Are you waiting for the day when you can kiss your mortgage goodbye and gain access to the almighty mortgage release or mortgage satisfaction documents from your lender?
No matter how long your mortgage term is, you have the power to end your relationship with your mortgage obligation whenever you are ready to commit to a payoff plan. All you have to do is identify your target mortgage payoff date and work backward to figure out what you have to do now to make it happen.
Ready to get started? Here are 3 ways to pay off your mortgage faster and get on track to achieving mortgage freedom.
When people go through the mortgage approval process, they typically depend solely on the lender to tell them how much “borrowing power” they have based on the financial information that has been presented. Many people don’t take the extra step to determine how much house they can actually afford based on the goals they have and the life they want to live.
Do yourself a favor and do a thorough review of your assets, liabilities, income, and expenses (or hire a financial coach) to figure out how much you can comfortably spend on a home to avoid being stuck with an extended mortgage period.
Buying a home below your means will give you a good financial cushion to be able to make extra payments throughout the year.
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Do you want to know how you can make more monthly payments towards your mortgage without increasing your income sources or decreasing expenses?
Here’s a mathematical goodie you should be aware of: make bi-weekly payments.
Instead of making one payment per month, you can make half of your monthly payment every 2 weeks and you’ll end up paying an extra mortgage payment at the end of the year.
Let’s say your mortgage is $1000 a month. You can pay $500 every 2 weeks. This will allow you to make 26 bi-weekly payments throughout the year because you are making payments every 2 weeks and there are 52 weeks in a year. Well, if you make 26 bi-weekly payments, that equates to 13 full payments every year instead of the typical 12 payments a year.
Now, you’ve just slashed some years off your mortgage pay-off date and saved thousands in interest costs. Check with your lender to determine how this works and how you can get started.
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Did you get a work bonus or a lump sum amount from a tax return? Are you wondering what’s the best way to spend the extra cash?
Evaluate your financial situation and your goals. The best use of your money right now may be to allocate the money toward your mortgage. Your future self will thank you!
When you make extra payments towards your mortgage, that decreases your principal loan balance. When your balance is lower, you pay less in interest giving you a chance to keep more money in your pocket over the long term.
If your goal is to pay off your mortgage faster, you’ll be pleased by how submitting extra payments throughout the year will shorten the life of your loan.
Are you ready to get started but don’t know how? Work with a financial coach who can help you explore your options and help you determine if there are any prepayment fees you should be aware of. The faster you eliminate your mortgage, the sooner you’ll be able to free up your cash flow and reallocate your money toward the things that matter most to you.
Charlene Rhinehart is an award-winning speaker, consultant, and coach who uses digital technologies to share inspiring stories with the world. She helps others live their best life as a Financial Coach at Wealthy Women Daily, Founder of the Career Goddess Academy, and Travel & Lifestyle Writer at BlackCoupleTravels.com. Charlene recently published her first book, “Dividends Are a Queen’s Best Friend” on Amazon.
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