Statistics show that over 40% of all homeowners in American have paid off their home. If you’re currently in your “forever home” and you want to pay your mortgage off early, here are some options to consider.
First, try switching to bi-monthly payments. Let’s say your payment is $2,000 per month (or $24,000 per year). If you switch to bi-monthly payments, you’ll pay off $26,000 per year. In other words, you’ll have made one extra payment without affecting your budget much. If you have a 30-year, $200,000 mortgage with a rate of 5%, bi-monthly payments will save you up to $34,000 at the end of your term.
Second, you can make one extra payment each month. Even if you paid as little as $100 per month, studies show that this sum can cut off anywhere from five to eight years off your loan.
You can also refinance into a shorter term. If you can afford to pay more per month, for example, you can switch from a 30-year term to a 15-year term. The rate will be lower, and you’ll be able to save a huge sum.
If you’re just refinancing for a 30-year loan, the rule of thumb is to aim for 2% lower, but it’s hard to reach this mark at the moment because rates are so low, and there are a lot of financing fees you have to pay, so take that into consideration.
If you have any more questions about this topic or you need the name of a good mortgage lender in our area, don’t hesitate to reach out to me. I’d be happy to help you.