Paying off your mortgage early requires time, discipline, and effort. Many financial experts agree that paying off your mortgage should be a top priority. These professionals recommend paying off the principal as early as possible. As a homeowner, you could save tens of thousands in interest and fees. Plus, you can pay off everything early without the need for mortgage refinancing or loan restructuring. Simply, use the most brilliant way to pay off your mortgage: pay faster early.
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Consider Early Mortgage Payment Penalties
Before paying off your mortgage faster, you should consider the terms of your loan to avoid any legal related risks. Speak with your financial professional about what type of payment would be best for your unique situation. Oftentimes, lenders will have a prepayment penalty because they rely on mortgage interest for profits. Thus, you might have a clause that limits your pre-payment to 25% or 30% per year. For example, if you have a $400,000 mortgage, you can only pay off $100,000 of principal in the first year. This percentage may lower in subsequent years. Or, if you are lucky, you may not have any prepayment penalty at all. Certainly, speak with your financial advisor and lender to learn about your mortgage repayment terms.
Pay A Lump Sum To Your Mortgage Principal
By paying a lump sum towards your mortgage, the principal balance will instantly reduce. Also, you will save money on interest and shorten the If you receive a large tax deduction or receive an inheritance, it can be beneficial towards your mortgage. For example, you inherited $10,000 and decide to use it towards a home that you just purchased. You will save $14,000 in interest that would have been built into your home loan each year. As a homeowner, you can pay a lump sum towards the mortgage principal. This step will assist in being able to pay off your mortgage faster.
Get A Side-Hustle To Pay Your Mortgage
Of course, you can always get a side hustle to help pay off your mortgage early. There’s a variety of different gigs and opportunities where you can earn some extra cash. You may even be able to double your income. Some of the most lucrative opportunities include blogging, business eCommerce dropshipping, or building an online course. Plus, you could start an affiliate marketing business, sell crafty handmade products, or offer virtual tutoring services. To reduce commitment, start off on a freelance basis. Then, you can take on more clients and responsibilities as you continue to grow. Absolutely, getting an extra side hustle is a great way to pay off your mortgage.
Continuously Recast Your Mortgage
Constantly recasting your mortgage can additionally support faster commercial repayment. Simply put, recasting involves making extra lump sum payments towards the mortgage principal of your loan.
Later on, your lenders may agree to adjust loan terms based on recasted payments. Of course, mortgage recasting is often a better choice than refinancing — especially if you already have a low commercial interest rate. Absolutely, continuously recast your debt obligations to pay off your mortgage faster.
Additionally, you may consider using your stocks or investments to pay off your mortgage. Some savvy investors can take a loan on their investments. Then, use that loan to pay off the mortgage. Additionally, if you have a small business 401K plan, you can take a loan for up to 50% of the assets in the plan. In this case, you pay the interest back to your own account. Or, if you have equities that can be sold, that’s another way to raise cash to pay off your mortgage with a lump sum payment. Certainly, selling or leveraging investments can give you the financial boost needed to pay off your mortgage early.
Try The “Dollar-Per-Month” Method
The dollar-per-month method is a simple, financially responsible method to pay off your mortgage. Every month, you should aim to increase your mortgage payment by $1. Say your mortgage is $2,000 the first month. Pay $2,001 the second month, $2,002 the third month, and so on. While it seems minuscule this method can actually take years off of your mortgage payment date. Certainly, try the dollar-per-month method to pay off your mortgage faster.
There’s a number of brilliant ways to pay off your mortgage early. Start by analyzing early mortgage payment penalties. If none exist, you should immediately start contributing extra lump sums toward your principal. This is an essential money management tip for today’s top small businesses. To get quick access to extra cash, you may want to think about getting a side hustle. Throughout the process, commit to continuously recasting your mortgage. Follow the points above to learn how to pay off your mortgage fast in the most brilliant way.