Tips for Paying Off Your Mortgage Early
There are two main types of mortgages : fixed-rate mortgages and adjustable-rate mortgages. Fixed-rate mortgages are those in which the interest rate typically stays the same over the entire term, whether that is 15, 20, or 30 years. Adjustable-rate mortgages, on the other hand, usually offer lower initial rates which fluctuate over the life of the loan and may lead to higher loan payments. However, most individuals do not realize that they do have the option of paying off their loan early regardless of whether they have chosen a 15, 20, or 30 year loan. This article will provide several tips to help you pay off your mortgage earlier.
Make Higher Monthly Payments
One of the simplest ways to pay off your home loan early is to make higher payments each month. Consider going over your budget and seeing if you can tack on an additional 50 to 100 dollars to your payment, as this will not only shorten the length of the loan and reduce your interest, but will also make a dent in your principal.
Change to Biweekly Payments
Another way to pay off your mortgage before your term is to switch to biweekly payments. If you consider the fact that there are 52 weeks in a year, and you pay half of your monthly payments every other week—you will end up making 26 half-payments at the end of the year, or the same as 13 full monthly payments. This means that paying biweekly will allow you to overpay by one month at the end of the year, and in doing so, allows you to potentially cut down your mortgage by several years.
Refinance Your Loan
Refinancing your current loan is another way to pay off your mortgage early, but only if you can afford higher monthly payments as you are reducing the amount of time you have to pay off the same loan amount.
For more information on home loans , mortgage refinancing, or our other loan products, contact GCS Credit Union today at (618) 797-7993. You can also click on the link to visit us at our website.