Although the average mortgage in the US is about $ 200,000, you do not have to pay off your home for more than 30 years. Check out these tips to help you pay off your mortgage early. (iStock)
Thirty years is a long time, but it is the most common repayment term for mortgage loans in the US. According to Experian, the average mortgage debt among Americans is $ 215,655. While this is a large amount of money to hang over your head, there are various solutions to consider if you want to pay off your mortgage balance quickly.
The fastest way to pay off a $ 200,000 home loan is to do things like mortgage refinancing, make extra payments, switch to a bi-monthly payment plan instead of monthly, or opt for a flexible loan term. Let’s take a closer look at each of these options:
- Refinancing Your Mortgage
- Change your mortgage payment schedule
- Pay off other debts
- House hack
- Use your tax refund and windfall
If it is interesting to pay off your mortgage loan, you can visit a market like Credible to research the refinancing rates and compare mortgage companies.
How can I speed up my mortgage payout?
1. Refinancing your mortgage
Refinancing your mortgage can help you take advantage of today’s current refinancing rates and possibly pay off your home sooner. You can potentially save thousands of dollars over the course of your loan with a lower interest rate and a shorter term.
If you are refinancing your mortgage, also consider changing the type of loan to achieve your financial goals. A 5/1 mortgage with an adjustable rate, for example, could be an option that would offer you a much lower interest rate in the short term. A 5/1 ARM usually offers a fixed interest rate for five years. Thereafter, the interest rate adjusts once a year.
Visit Credible to refinance loan options for multiple mortgage lenders and be approved for mortgage refinancing within minutes.
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2. Change your mortgage schedule
You do not have to pay monthly on your mortgage. In fact, you can cut off the loan period by a few years by switching to fortnightly payments. Divide your mortgage loan only in half and pay the amount every two weeks.
Some months are longer than others, so you can end up making three payments a month if you are paid fortnightly. At the end of the year, you made the amount of 13 monthly payments.
You can also try to pay extra for the principal balance. For example, budgeting an extra $ 200 or $ 500 on your monthly payments can make a big dent in your mortgage balance.
If you want to refinance your mortgage before switching from monthly installments, you can view quotes from different mortgage companies with Credible without withdrawing your credit, so you can first look after and research carefully before committing to anything.
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3. Pay off other debts
If you want to pay off a $ 200,000 mortgage quickly, first try to get rid of your other debt. Whether you have credit card debt, personal loans, a car loan or student loans, start paying off all non-mortgage loans, and this will free up a lot of your income.
For example, if your (non-mortgage) minimum debt payments are $ 600, you can be freed up $ 600 a month or $ 7,200 a year if you pay off your debt. On top of that, you are adding money to your budget for other needs and financial purposes while focusing on paying off your mortgage.
Consider taking out a debt consolidation loan if you have multiple credit card debt with high interest rates. You can use Credible’s payment calculator and compare personal lenders and rates.
This is how debt consolidation helps to speed up your paid goals
4. House hack
Home hacking is the place where you rent out a portion of your home and use the proceeds to pay off your mortgage or replenish your bills. If you have a basement, spare room or extra space that you can rent, you can earn cash to pay off your mortgage faster.
If you do not want to rent your spare space to other people, you can rent your garage or barn as a storage space to someone else and thus earn extra money.
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5. Use your tax refund and windfall
Windfall is usually extra money you did not really expect. If you stick to your budget and live off the income you earn, you can put windfall like tax rebates or bonuses in the repayment of your mortgage. Even if the windfall only rounds off your mortgage payment to the next hundred dollars, extra money for the principal balance will help you cut off years of your mortgage repayment.
DO I HAVE TO PAY OUT MY TEAM DOOR EARLY?
It is possible to pay off your mortgage well in advance
Many people have paid off their home loan early, and so can you. All you need is a clear financial strategy that suits you. One of the easiest ways to get started is to see if you can refinance your mortgage at a lower interest rate. If you do a mortgage refinancing, you can save money and pay off your mortgage faster.
Visit Credible to compare rates and mortgage lenders and also contact an experienced lending officer who can answer your mortgage questions.