Paying your mortgage monthly can make you feel like you will be doing it for the rest of your life. Fortunately, this doesn’t have to be the case. When you pay off your lengthy fixed-rate mortgage early, you save a lot of money in interest charges.
“You can easily rent out unused space in your home and make money from it. It is legally acceptable to rent out rooms in your spacious home to vacationers or students looking for a place to stay.”
For instance, if you have a $100,000 mortgage with a 4% interest rate, you can reduce the loan term by four years and save over $15,000 in interest if you make an extra payment of $890 per year. There are many ways you can pay your mortgage early, and you don’t have to make a drastic financial adjustment. Here are the three simple ways to pay your mortgage early.
Renting Out Space in Your Home
You can easily rent out unused space in your home and make money from it. It is legally acceptable to rent out rooms in your spacious home to vacationers or students looking for a place to stay. Alternatively, you can rent out your entire house and go live somewhere less expensive. You can advertise your space on land for sale platforms to increase your market. Doing so will generate extra income, which you can use to pay your mortgage early.
Refinancing Your Mortgage
Mortgage refinancing is another reliable way of repaying your mortgage early. It means getting a new loan to offset the original. Mortgage refinancing helps in several ways, including;
● Gives you an option of taking better mortgage rates.
● You can commit to higher mortgage payments and shorten the loan term, paying off the debt sooner.
By refinancing your mortgage, you can pay off the mortgage early and significantly reduce the interest costs. This option also gets rid of private mortgage insurance, which could be unfavorable. You will save a significant amount of money that you can use to pay the mortgage principal, reducing the loan term even more.
Making Biweekly Payments
Making biweekly payments will significantly reduce the loan term. Therefore, instead of 12 mortgage payments annually, you can make smaller payments every two weeks. This will introduce around 12 new mortgage payments annually. At that rate, the loan’s principal balance is significantly reduced, making the payoff period shorter.
“You will save a significant amount of money that you can use to pay the mortgage principal, reducing the loan term even more.”
Plan To Pay Your Mortgage Early
Even though mortgage loans are helpful, repaying them can be challenging if you don’t have a good strategy. You can significantly reduce the mortgage payment period by implementing these strategies. For example, converting some of the extra space into land for sale can help cultivate extra funding for mortgage payments.