Tips to Shorten Your Mortgage Term
Although you may have chosen a 30-year mortgage loan, who says you must wait that long to own your home outright? If you are someone who would like to pay off your mortgage early, there are several ways to accomplish your goal.
Refinance into a 10, 15, or 20-year mortgage – although a 30-year mortgage is most common, many lenders give you the choice of taking out a shorter loan. Since 10, 15, or 20-year loans are on an accelerated schedule, your payments will go towards lowering the principal rather than the interest.
Pay more on your loan each month without refinancing – this option allows you to pay off your home in a quicker amount of time, but still gives you the flexibility of being able to use your money in case of an emergency. Should you become severely sick or lose your job, you may find yourself unable to afford the higher payments of a shorter mortgage term. Just keep in mind – if you decide to go this route, it’s up to you to make the extra payments each month. This option can be difficult for some as it can be very tempting to use the money for other things other than your mortgage loan.
Make bi-weekly payments – rather than making monthly payments, make a payment every two weeks. At the end of each year, you will end up giving your lender 13 mortgage payments instead of 12 – helping you to pay off your loan faster.
Shop for less expensive homeowner’s insurance – lowering your homeowner’s insurance premiums will also drop your monthly mortgage payment. Contact different companies or ask if you can bundle policies together (such as your home and car) to get a lower rate. Just remember to keep making the same payment amount to help accelerate your payoff date.
Even if you cannot afford to pay a lot of extra money on your loan every month, start small and increase the payments whenever possible. Use a mortgage calculator to see how adding a payment to your principal can help reduce your interest and shorten the length of your loan.
Let Us Help You Pick the Best Loan Option
At Butler Mortgage, we offer numerous loan programs. Before picking out a 30-year conventional loan, contact us to see if there is another mortgage term that may better suit your needs. For more information or to get-prequalified, call us today at 407-931-3800.