- Refinance to a Shorter Term: Refinancing your mortgage to a shorter term, such as a 15-year mortgage, can result in higher monthly payments but a lower overall interest cost.
- Make Extra Payments: One of the most straightforward ways to pay off your mortgage faster is to make extra payments towards the principal. Even small additional payments can add up over time and reduce the overall interest you pay. Setting up automatic payments to your mortgage lender for extra principal payments can help ensure you stick to your payoff strategy.
- Biweekly Payments: Instead of making monthly payments, consider making half of your monthly payment every two weeks. This results in 26 half-payments, or 13 full payments per year instead of the usual 12. However, make sure you do not pay a fee to your mortgage company in order to make biweekly payments. If your mortgage servicer doesn’t offer this option, you can roughly accomplish the same goal by mailing in one extra mortgage payment each year, or by taking the principal and interest of your mortgage payment, dividing it by 12, and adding that amount to your monthly payment.
- Use Unexpected Bonuses: Whenever you receive unexpected windfalls like tax refunds, bonuses or gifts, consider putting a portion of that money towards your mortgage principal.
- Budget for Extra Payments: Include mortgage prepayments in your monthly budget. Treating them as a regular expense can help ensure consistent extra payments.
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