Four Ways to Pay Off your Mortgage Faster

Who doesn’t want to pay off their mortgage faster?

Anytime you are considering paying off your mortgage early, or refinancing it to a lower interest rate, you should first understand the mechanisms that are involved.

Have you ever looked – really looked – at your monthly mortgage payment and noticed that more money is being applied to your loan’s interest rather than your outstanding principal?

Frustrating as that may seem, this situation is common due to the fact that you are paying your mortgage through the process of mortgage amortization.

What’s that? Simply stated, mortgage amortization is the difference between your monthly mortgage payment and its interest rate.

By practicing one of the following methods during the course of your mortgage’s term, you too can pay off your mortgage faster by decreasing both its principal and its interest.

So that you can get a better picture, here is an example:

If you financed the home of your dreams for the initial sum of $200,000 with a 30-year fixed rate term, and no down payment, you’ll be paying over $440,000* when all is said and done. ^*Based on a 6.25% interest rate. However, paying off your loan in 20 years instead of 30, can net you nearly $100,000 in savings (based on the same information used above).

These savings that can be used for virtually anything your heart desires including investing, paying other expenses and debts, taking a vacation, shopping, etc.

Pay off Your Mortgage Faster

1. Increase Your Monthly Payments

   If your financial situation allows, start playing with our online mortgage calculators and see how increasing your monthly mortgage payments can benefit you.

2. Restructure Your Payment Schedule

   Restructuring your monthly payment schedule to reflect your needs, whether it's on a biweekly or weekly basis, allows you to lower your mortgage’s outstanding principal.

   If your financial situation allows, we at Forthright Funding recommend speaking with one of our mortgage specialist to ensure the interest rate consistently remains on a monthly basis.

3. Refinance to a Shorter Term

   If you can commit to making increased payments each month over the entire course of your mortgage’s term, you may want to consider refinancing to a shorter term.

   Perhaps a 15-year term? The benefits of taking this road are many and potentially include paying less in interest as well as truly paying off your loan faster.

4. Refinance to a Lower Interest Rate

   If your mortgage’s current interest rate is higher than 5 percent, why not consider refinancing to a lower interest rate?

   With a lower interest rate, your required monthly payments would be less, thus allowing you to have a better opportunity of increasing the amount or restructuring the schedule.

Time is Of the Essence

Are you interested in paying off your mortgage faster or refinancing to a lower interest rate? Then contact our friendly mortgage specialists for more information at (855) 351-9522.