Paying off your mortgage is among the most significant milestones in homeownership. Nothing will give you a sense of relief and accomplishment than seeing that zero balance on your mortgage statement.
By now, you should have your all of your consumer debt paid off. Your employer matched 401(K) should be maxed; your IRA or ROTH IRA should be maxed; and you’re investing 15%. Now, it’s time to get the mortgage paid off.
Now, take the money that you were using to payoff your debt and pay it on the PRINCIPAL balance of your home mortgage. You need to ensure that you let the mortgage company, bank, or financial institution know that the extra money is to be applied to the principal. If you don’t, they will apply it as advance monthly payments and your principal balance won’t be significantly reduced. The bankers want your money.
If refinancing your mortgage is a good option to secure a lower interest rate and reduce the time you need to pay off the loan, then, you should refinance. Always, take into account the fees associated with the refinancing. They can be significant. Additionally, consider making biweekly payments which will shorten your loan term. Don’t go to the financial institution to get them to set it up for you. They’ll charge you for doing that. All you need to do is pay twice in one month.
Finally, if you receive extra income such as bonuses or tax refunds, use it to make lump sum payments on your mortgage.
Paying off your mortgage is a significant accomplishment, and by implementing these tips, you’ll be well on your way to mortgage-free living.
Related Post:
