In part one of this two-part blog, we went over some of the factors you should consider if you’re thinking about attempting to pay down your mortgage early. This isn’t always the prudent financial move, even if it seems like a net positive in most cases where it’s possible, but there are plenty of situations where it can be a big benefit to your finances.
At Altius Mortgage and our partners at Mortgage Ogden, we can help you understand the various options at your disposal here. While refinancing your mortgage might be the simplest way, and we’ll list some choices you might have available here, there are also several other approaches you might be able to take. Here’s a look at various tactics for paying a mortgage down early if you’ve decided this is the right move.
Firstly, there are several refinancing situations that might be possible to help you pay your mortgage off early:
- Lower rate: In some circumstances, you can refinance to a lower-rate mortgage – but continue paying your old payment number off, leading to an early completion.
- Shorter term: You may also be able to refinance to a 15- or 10-year term with higher payments.
- Mortgage insurance: If you’re using the FHA mortgage program with mortgage insurance, you might be able to refinance out of this program and drop the insurance payment.
- You can make extra payments on top of your monthly amount – be sure to specifically target these payments toward your principal debt.
- Biweekly: Some people choose to make these payments biweekly instead of monthly, adding up to 26 payments per year rather than 24.
- Rounding up: A slower way of paying down mortgages earlier is by rounding payments up to some nearby round number.
There are several situations where you might have increased income or a windfall that can help here:
- Your salary rises and you are able to apply the additional income to your mortgage.
- You receive a sizable tax refund that you can apply to the principal balance.
- You can host a garage sale or similar event to raise extra funds.
- Consider cutting the cable cord or eliminating other unneeded expenses.
- Receive a no-interest loan from a family member or friend.
- Consider finding a roommate or multiple renters to increase your income and pay down the mortgage.
- Put the property on Airbnb, particularly if you travel often and have periods where you aren’t home.
- Rent a garage and use proceeds to pay the mortgage early.
A few other approaches you might be able to take here:
- Consolidate two or more loans into a single one to get a blended rate.
- Put more money down in advance, avoiding private mortgage insurance and getting a lower rate.
- Use credit card rewards and points, or bank sign-up bonuses, to pay balances.
For more on how to pay down mortgages early and whether this is the right move for you, or to learn about any of our mortgage loan services, speak to the staff at Altius Mortgage and our partners at Mortgage Ogden today.