Like many people, you probably took out a 30-year loan to buy your home. Just because you have 30 years to pay it doesn’t mean it has to take that long. The sooner you pay off your mortgage, the less interest you’ll pay over time. There are plenty of ways to pay off a home loan sooner. Here are three effective and attainable options:
1. Make Extra Payments – Don’t just make these extra payments indiscriminately. Make sure to specify that the extra money is to be applied to the principal of the loan. By reducing the principal of your home loan, you will pay less interest over time. Most lenders allow homeowners to make extra payments toward the principal of their loans, but call and check before sending any extra money.
2. Chip Away at the Principal with Your Tax Refund – If you get a decent tax refund every year, consider applying it directly toward the principal of your mortgage. As tempting as it may be to go out and buy a few big-ticket items, paying off your home loan ahead of time will feel really good and will save you a lot of cash in the long run.
3. Make Two Payments Per Month – That doesn’t mean you have to pay double on your home loan per month. Rather, it means to pay half of what you owe every 15 days. This helps because it allows you to squeeze in two extra payments per year, which can really add up over time.
When it comes to paying off a mortgage faster, every little bit helps. The lower your principal balance is, the less interest that is charged. Applying extra payments at the beginning of your loan is an especially effective way to reduce the balance more quickly, so get started now.
First Mortgage Solutions helps homeowner’s find the best possible loan program for his or her unique financial situation. Contact us today and learn more about securing a home loan, refinancing or debt consolidation.
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