Refinance Your Loan: Refinancing a 30-year fixed mortgage to a 15-year fixed mortgage can help you save thousands on interest and build equity faster. Short-term mortgages typically have a lower interest rate, which means even more savings.
Make Extra Payments: If you don’t want to refinance, adding a few more dollars to your mortgage payment each month or even just once a year (maybe with that tax refund) can help you get it paid for quicker. Make sure all extra payments are credited toward your loan principal, not the interest, and your mortgage does not have a pre-payment penalty.
Create a Budget: Seeing how you spend your hard-earned dollars can help you find ways to put more money toward paying down your mortgage each month.
Change Your Payment Schedule: In a biweekly payment plan, you pay a mortgage “half-payment” every other week, and at the end of the year, you will have made thirteen payments instead of twelve, one extra payment.
The Proof Is in the Pudding: Use this calculator to see the impact extra payments could have on the life of your loan.
Positive Effects: Some experts say that having your home paid off before retirement can lead to happier golden years due to reduced cash-flow needs and the peace of mind from being debt-free.
Here is a brief summary of the benefits of refinancing:
- Lowering your interest rate.
- Shortening the life of your loan.
- Consolidating debt & gaining cash with cash-out refinancing.
- Getting rid of private mortgage insurance (PMI).
- Reducing financial risk.
- Adding or removing a loan cosigner.
Read more here on the guide on mortgage refinance.