How to pay off a $ 200,000 mortgage faster
Thirty years is a long time, but it is the most common mortgage repayment term in the United States. Experian, the average mortgage debt of Americans is $ 215,655. While this is a huge amount of money to have on top of your head, there are several solutions to consider if you want to. quickly pay off your mortgage balance.
The fastest ways to pay off a $ 200,000 home loan These include doing things like mortgage refinancing, making additional payments, switching to a bi-weekly rather than monthly payment schedule, or choosing a flexible loan term. Let’s take a closer look at each of these options:
- Refinance Your Mortgage
- Change your mortgage payment schedule
- Pay off other debts
- Home hacking
- Use your tax refund and exceptional benefits
If paying off your mortgage faster sounds good, you can visit a market like Credible to find out about refinancing rates and compare mortgage companies.
How can I speed up the repayment of my mortgage?
1. Refinancing your mortgage
Refinancing your mortgage can help you take advantage of today’s low refinancing rates and potentially pay off your home sooner. You can potentially save thousands of dollars over the life of your loan with a lower interest rate and shorter loan term.
When refinancing your mortgage, also consider change the type of loan you need to help achieve your financial goals. For example, a 5/1 variable rate mortgage could be an option that would give you a short term at a much lower interest rate. An ARM 5/1 typically offers a fixed interest rate for five years. After that, the interest rate adjusts once a year.
Visit Credible to see refinance loan options with multiple mortgage lenders and get pre-approved for mortgage refinancing in minutes.
2. Change your mortgage payment schedule
You don’t have to make monthly payments on your mortgage. In fact, you can reduce the life of your loan by several years by opting for bi-weekly payments. All you need to do is divide your mortgage payment in half and pay that amount every two weeks.
Some months are longer than others, so you may end up making three payments per month if you get paid every two weeks. By the end of the year, you will have made the equivalent of 13 monthly payments.
You can also try paying extra for the principal balance. Budgeting an additional $ 200 or $ 500 on your monthly payments, for example, can go a long way in reducing your mortgage balance significantly.
If you want to refinance your mortgage before making monthly payments, Credible lets you see quotes from different mortgage companies without pulling your credit, so you can shop around and do your due diligence before you embark on anything.
3. Pay off other debts
If you want to pay off a $ 200,000 mortgage quickly, try get rid of your other debts first. Whether you have credit card debt, personal loans, a car loan, or student loans, start paying off all non-mortgage debt and it will free up a large chunk of your income.
If your minimum debt (non-mortgage) payment is $ 600, for example, paying off your debt will free you up to $ 600 per month or $ 7,200 per year. Plus, you’ll put money back into your budget for other financial needs and goals while focusing on paying off your mortgage.
4. Home hacking
Home hacking involves renting out part of your home and using the income to pay off your mortgage or supplement your bills. If you have a basement, spare bedroom, or extra space that you could rent out, you could earn money to help pay off your mortgage faster.
If you are not interested in renting out your free space to other people, you might want to rent your garage or shed as storage space to someone else and earn some extra cash from this way.
5. Use your tax refund and windfall benefits
Windfall wins are usually extra money that you didn’t really expect. If you stick to your budget and live on the income you earn, you can put tax refund or premiums to pay off your mortgage. Even if the windfall just rounds your mortgage payment to the next hundred dollars, putting extra money on the principal balance will help keep your mortgage down for years to come.
Paying off your mortgage early is possible
Many people have prepaid their mortgage, and you can too. You just need a clear financial strategy it works for you. One of the easiest ways to get started is to see if you can refinance your mortgage at a lower interest rate. Mortgage refinancing can save you money while paying off your mortgage faster.
Make sure to visit Credible at compare mortgage rates and lenders and get in touch with an experienced loan officer who can answer your mortgage questions.