The best way to reduce your mortgage debt is to pay it off quickly and in large increments. The first place to start is by getting a 15-year mortgage with payments that dont exceed 25 percent of your income. If you dont have a 15-year mortgage, it might be a good time to consider refinancing. If you cant refinance, consider a few options in paying your mortgage off quickly.
Extra Payments
If you have a budget, tweak the mortgage category so that you pay more than the minimum required payment each month. No amount is too small, so even an extra $25 per month will make a difference. Payments on a new mortgage go first toward paying the interest and then toward paying the principal, so it typically takes a long time to make a dent in the principal balance. If you dont have a budget, try the myriad financial tools found on DaveRamsey.com. Being disciplined about making regular extra payments can help pay your mortgage down more quickly than if you make those payments only sporadically.
Biweekly Payments
Biweekly mortgage plans can save you thousands of dollars in interest and shave 10 years off of your mortgage term. Instead of paying your mortgage payment once a month, divide the payment in half and pay that amount twice a month. This equates to an extra full mortgage payment each year, and can add up big in terms of interest savings over the life of the mortgage.
Sacrifice
Sacrificing might make the biggest difference in reducing your mortgage. Cutting back on expenses will free extra funds to pay down your mortgage. Consider do-it-yourself projects instead of hiring a contractor, shop at consignment or thrift stores instead of the mall, and eat meals at home instead of going out. Walk to work instead of driving, cancel gym and other memberships, and put an extra blanket on the bed instead of turning up the heat. By making these sacrifices, youll be surprised at how much extra money you can save toward reducing your mortgage debt.
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