Paying extra mortgage payments, ahead of time, gets your mortgage paid off faster than the regular schedule. Unfortunately, many of us are not disciplined enough to put money aside and routinely make those extra payments. However, we do reliably make our mortgage payments on time. Are you one of those folks who have the money but lack the organization and discipline to make early mortgage payments? What if you really want to pay off your mortgage faster than the 30 years now stretching out ahead of you and close to retirement? There is an answer.
How About Refinancing?
People take advantage of home refinancing for a variety of reasons. They may want to take some cash equity out of their home to start a business or pay off accumulated bills. They may simply want to take advantage of a drop in interest rates in the mortgage sector. But you can also simply refinance your home with a shorter duration mortgage. This approach is especially attractive if rates have fallen and you are looking to refinance anyway. Take your thirty-year mortgage down to fifteen or your fifteen-year mortgage down to ten. With the help of your lender, you should be able to pick financing terms that allow you to increase your payments, within a comfortable range, and accomplish the job of paying off all of your home debt in a much shorter time than you now expect with your current mortgage.
How Many Homes Do You Now Need?
Your children are all grown up and have families of their own. Aside from having the crew over for holiday dinners you do not need the space once required to raise a large family. This is a good time to downsize, or as they now say right-size, your home. When you do this, put the equity from your old home into a down-payment for your new and less expensive home. And then opt for a much shorter mortgage. For those of us in mid-life, it also makes sense to shorten the duration of the mortgage so that you pay it off well before entering into retirement when your income will be less.
The time to think about paying off a mortgage in a shorter length of time is before you go out shopping for a home and getting pre-approved for your mortgage. It is tempting to go with a 30-year mortgage because the payment is month is less but in fact, you will pay a lot more money over the years than if you go with a shorter duration like 15 years. To make sure that higher payments on a shorter duration mortgage will work out for you plan ahead. Make sure that your finances are stable and that you have debts paid off and have saved cash for emergencies and even several months of routine expenses and do this before obligating yourself to a long-term mortgage. First of all talk to your realtor about your options in terms of how expensive a home you can afford and what financing terms will work out best for you.