Lot of people think in the annual budget of mortgage that they are paying . It causes a real problem for who doesn’t understand the basics of strategic planning. Here are some expert-approved methods to help you tackle your mortgage payments:
– *Refinance to a Shorter Term*:
Consider refinancing your mortgage to a shorter term, such as a 15-year or 20-year loan. This will increase your monthly payments but save you thousands in interest payments over the life of the loan. For instance, refinancing a $250,000 loan from a 30-year term to a 20-year term could save you over $65,000 in interest.
– *Make Extra Principal Payments*:
Paying extra towards your mortgage principal can significantly reduce your loan term and interest payments. Even an additional $250 per month can shave off seven years and four months from your loan term, saving you over $59,000 in interest.
– *Bi-Weekly Payments*:
Divide your monthly payment in half and pay every two weeks. This will result in 26 payments per year, rather than 12, which can help reduce your loan term. For example, making bi-weekly payments on a $200,000 mortgage could save you over $28,500 in interest and cut four and a half years off your loan term.
– *Lump-Sum Payments*:
Apply lump sums, such as tax refunds or bonuses, towards your mortgage principal. This can significantly reduce your loan balance and interest payments.
– *Mortgage Recasting*:
If refinancing isn’t an option, consider recasting your mortgage. This involves making a large payment towards your principal and having your lender recalculate your monthly payments based on the new balance.
*Before You Start*
– *Check Your Loan Terms*: Review your loan agreement to ensure you won’t face prepayment penalties for making extra payments.
– *Prioritize Emergency Savings*: Build an emergency fund to cover three to six months of living expenses before aggressively paying off your mortgage.
– *Consider Alternative
Investments*:
Weigh the benefits of paying off your mortgage against other investment opportunities, such as retirement accounts or stocks.
– *Consult a Financial Advisor*:
If you’re unsure about the best strategy for your situation, consult a financial advisor for personalized guidance.
