Many home owners dream of one day being able to pay off their mortgage, but is it really possible?
Home owners will need to take into account a variety of factors when deciding whether paying off their mortgage makes the most sense for them in their current financial situation But for those who’ve made it their goal, the following are the two most common ways to paying down the mortgage faster:
1. Arrange a bi-weekly mortgage payment structure: These bi-weekly payment structures — paying the mortgage partially twice a month instead of all at once at the end of the month — ultimately make it so the home owner ends up making one extra payment per year. And just one extra payment a year can actually take a big chunk out of the time to pay off your mortgage.
2. Make extra principal payments: This can trim your principal balance on your mortgage. Some may do this by making one big extra payment at the end of the year or other borrowers may choose to make extra principal payments monthly. Columnist Justin McHood says that the “faster is better” approach when making extra principal payments. “Because the monthly interest expense on a mortgage is calculated on the loan balance … the sooner you can get a lower loan balance, the lower your monthly interest expenses will be,” he writes.