Paying off your mortgage early is not an impossible dream. In fact, it is perhaps one of the easiest things you can accomplish financially. The great news is that you can shave ten years off your mortgage payments, and pay off your home early, without ever having to cause yourself financial hardship or strain.
If you are interested in how to pay off your home in 20 years, you will be pleased to know that it can be accomplished in three easy steps.
Understand How Your Mortgage Works
Many people sign a mortgage blindly. They understand the concept of a mortgage, and realize they have to make payments for 30 years, but they don’t really know how the loan works.
When you make your monthly payment on a mortgage, a majority of that payment is for the interest on the loan. In the beginning, a very small portion is applied to the actual balance of the loan. The only way to pay your mortgage off early is to make additional payments to the principal balance, which in turn reduces the amount of interest you have to pay.
Make One Additional Payment Each Year
By making an additional payment each year on your loan, you can reduce the amount of money owed on the loan. This single extra payment each year is enough to reduce your principal balance enough to cut ten years of payments off of the loan.
This can be easily accomplished by paying half your mortgage payment every two weeks. By scheduling your mortgage payments every two weeks, you end up making an additional payment each year. This additional payment is applied directly to the balance of the loan.
Work With Your Lender
When you decide to take this course of action, contact your lender to make arrangements. Lenders are very appreciative of clients that are making efforts to pay down their loans. Set up an automatic payment plan with your lender to have half of your mortgage withdrawn from your account every two weeks. This will ensure that the lender understands your goals and makes the process easier for you.
There are many benefits to paying off your home early. You will save thousands of dollars in interest payments, and you will have extra money each month for your retirement. It is an easy way to become financially secure, while never interfering with your current lifestyle.