Mortgages can seem to last forever. If you feel as if you will never be out from under the weight of home debt, then you may be looking for ways to pay off your home sooner. Most of these methods are obvious when you know about them, but may not occur to you. To make it worse, most people don't even pay off their mortgage in the term it's set for. Paying off your mortgage can be a wonderful feeling - most people hate being in debt and can feel trapped by it. (Although it is often better to pay off higher interest debt such as credit cards first). So, here are five "secret" ways to pay off your mortgage faster.
1. Make an extra payment a year. There's two ways to do this. The first is to simply ask your bank about making thirteen payments instead of twelve. The second is to divide your payment into two bi-weekly payments - which quickly adds up to that extra payment. Avoid companies that try to charge you to pay bi-weekly. Obviously, this only works if you have that extra money. It is, though, something you can stop doing when times get tight. If you choose the extra payment a year method, consider doing it when (if) you get a tax refund or a Christmas bonus.
2. Pay more a month than you owe. It doesn't have to be much - $100 or so if you have it that month. Anything you pay that's extra goes straight to the principal rather than paying mostly interest, as is common early in mortgages. Banks will gladly take that slight extra payment. Just make sure you tell them to put it straight to the principle. For easy budgeting, consider making a specific extra payment a month, although some people prefer to look and see what extra cash they have available. Another way to do it for simplicity is to round your mortgage payment up to the next 100 or 500.
3. Look at property tax. In some states, the bank pays the property tax, which they then pass on to you. If property values have plummeted in your area, talk to the tax assessor. It may be worth getting your home re-evaluated, which will lower your payments (or you can keep them the same and let the bank put the extra towards your mortgage). You may also be able to get a property tax exemption or credit, especially if you are disabled or a veteran. These vary a lot by state - you need to do local research to find out what might apply to you.
4. Use windfalls. Rather than spending that Christmas bonus on a post-Christmas trip, consider putting all or part of it straight into your mortgage. Any unexpected cash can be leveraged this way - allowing you to pay down the mortgage without affecting your regular budget. Obviously, this is a case-by-case thing - always consider what other needs you might have - but it can provide a full extra payment that year.
5. Refinance. Especially if things have changed materially, consider refinancing your mortgage for either lower payments or a shorter term. The intuitive choice might be to go for a shorter term, but depending on your circumstances, it's worth doing the math on lower payments. You may be able to make more of them and catch up faster. In some cases, you can also use refinancing to consolidate other, higher interest loans into your mortgage, lowering your overall costs and debt burden.
If you are looking for ways to get debt-free and pay off your mortgage faster, it's worth considering these simple options - and it's always worth talking to your bank or a loan company about whether your circumstances make refinancing worth it.