For many loan applicants, the primary appeal of a 30-year mortgage is the lower monthly payments that it establishes. However, once you get into the routine of making those affordable mortgage payments, you may be dismayed to realize that your principal balance is being reduced at a snail’s pace. It may seem as though you will never reach your final loan payoff date decades from now. What can you do to pay off your mortgage faster?

Adjust Your Payment Schedule
One effective strategy is to split your monthly payment up into two sections and to pay it regularly every two weeks. By paying on a biweekly schedule rather than a monthly schedule, you will make the equivalent of an extra monthly payment throughout the year. Before you use this strategy, however, contact your lender. Some lenders may not allow you to make biweekly payments. On the other hand, if you are setting up a new mortgage, you may be able to structure this payment schedule into your loan terms.

Make an Extra Payment
You could keep your established monthly payment schedule and still make an extra annual payment each year. Simply adjust your budget so that you can comfortably afford to do so. An alternative is to use a windfall to make this payment. For example, you may usually get an IRS tax refund or an end-of-year bonus at work. Earmark these funds toward your mortgage balance reduction effort.

Pay More Than the Minimum
For some people, it is easier to make a slightly higher mortgage payment than required. For example, if your mortgage is $1,407, you can round that up to $1,500 each month. You could also simply add on an extra $100 or $200 per month rather than rounding up. Find a comfortable amount that works well with your budget, and habitually make the larger payment.

There are other strategies as well, such as recasting your mortgage, refinancing your mortgage, setting up an adjustable-rate mortgage and more. Do you want to explore your loan options in detail? Contact our lending team at MortgageDepot to learn more.

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