How to Get Your Mortgage Paid off Faster
Over the last few months, mortgage rates have dropped back down to all time-lows, and many people are looking to lock in a fixed rate through a new purchase or refinance. Typically, you have two options: a 15-year or 30-year loan. Many would love to take advantage of the lower interest rate with the 15-year loan, but can’t afford the significantly higher monthly payment.
There is another option you have, which is something I’ve been sharing with my clients for a number of years. If you take out the 30-year loan and simply make one extra payment per year, you can shave nearly eight years off the total life of the loan.
Even if that one extra payment isn’t feasible for you, you can break it down into bite-size pieces and have the same effect. Just add 1/12 of your monthly payment toward the principal each month and it will have the same impact. It’s a wonderful option for those of us who can’t afford the 15-year mortgage payment, but want to pay off their mortgage in under 30 years.