Owning your own home is something most folks in America would want dearly, and mortgages can help you do exactly that. 88% of home buyers use a mortgage and for good reasons too. Mortgages help people acquire their dream houses without having to pay the entire amount upfront. Instead, those who opt for mortgages have to make regular payments until they meet the full amount.
Mortgage Loan Payment
However, not everything is sunshine when it comes to mortgages. A huge mortgage may turn into a huge headache when it comes to loan payment. You may end up sacrificing a lot, including family vacations, early retirement, or getting that car you always wanted to pay off the loan. Luckily, you don’t have to.
Here are a few tips on how you can pay off your mortgage in less than ten years.
How to Pay off Your Loan Early
Loan payment is never easy, especially when you’re in massive debt. These few tips can, however, help you repay your mortgage in record time.
1. Frugal Is Always the Way to Go
It helps to be frugal when you want to pay off your mortgage early. This penny-pinching could cumulatively save you a lot of money that could go into your mortgage payment. A great way to start is by planting a garden where you can get most of your grocery supplies instead of going to the grocery store. If you live on a farm, the better. You could also try to live off one income, unlike spending both on family expenses, if you and your spouse are salaried employees.
2. Buy an Affordable Home
Taking a mortgage on a big expensive home could translate to serious problems when it comes to loan payment unless you can afford it. Fortunately, most institutions will check your current financial picture and determine the mortgage amount you qualify for. This figure, however, is an estimate and may not represent the actual figure on the grounds. If you feel like underqualified for a mortgage then don’t take the risk. Opt for a lesser option to purchase a more affordable house.
3. Get Rid of Other Debts
Paying off other debts will help you focus on the most important loan, your mortgage. As a rule of thumb, you may want to start with the most expensive ones first so the lesser loans will be a piece of cake. Once you’ve cleared every other debt, avoid delving further into debt by taking loans on unnecessary items. If you take out another loan, make sure it’s for investment purposes.
4. Put Surplus Cash in Your Mortgage
If you want to get rid of that mortgage in a short time, then pour every bit of cash towards your mortgage. Any work bonuses, gifts, or holiday expenses could be of immense help towards achieving your goal. Remember, the more you delay your mortgage payment, the more heavily it weighs down on your freedom, so consider sacrificing a few luxuries to pay your mortgage early. Luckily, with credit unions, you don’t have the huge interest rates that come with bank mortgages.
5. Pay the Principal Early
You’re better placed when you hit the principal as early as possible to avoid incurring huge interests on your mortgage in the long run. A great way of doing this is by channeling every extra bit of cash into your mortgage. Note that hitting the principal early could save you money in the thousands in the future, so you shouldn’t even be having second thoughts on the matter. Tax refunds are a great way to attack the principal and get rid of it early.
Paying off your mortgage in only ten years is not easy, but neither is it impossible. If you take these five tips to heart, you could be well on your way to paying your mortgage in record time. Remember, unlike banks, a credit union won’t charge you those hefty interest fees, so when it comes to mortgage, you know who to settle for.