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9 Ways To Pay Off Your Mortgage Early

Paying off your mortgage early is one of the most clever strategies real estate investors should use to maximize their profits. Why? Because settling your mortgage as early as possible helps you save on your monthly income.

Even for new homebuyers, they can avoid paying hefty interest rates. This extra cash they save can be used to finance other properties they plan to buy while still being able to survive daily based on their monthly income. How can you do it? Read on and find out!

1. Make extra house payments

If you earn more than enough to pay for everything you need including your savings, why not use that extra money to add to your mortgage payment? This way you can shorten your loan and gain total ownership of your house as early as possible.

2. Bring lunch to work

Eating lunch made from your home is a good way to save money rather than eating at restaurants during lunch break. Speaking of saving money, you can also use an energy-saving car, commute, bike, or walk to work if your office is near. The extra money you save from these endeavors can be used to add to your extra mortgage payments.

3. Refinance

Refinancing is the strategy of shortening your mortgage by paying a higher fee every month. As mentioned, if you can afford it while not compromising other financial needs, then, by all means, do it. But before everything else, talk to your mortgage agent and ask if this option is available.

4. Recast

Recasting is similar to refinancing. The only difference is that instead of increasing your monthly mortgage, you pay a huge sum towards your principal mortgage amount and the lender readjusts your mortgage to reflect your debt. This strategy is best for real estate investors who own multiple properties because they can use their profits to finance their recast.

5. Downsize

Among all of the strategies in this list, downsizing your home to finish your mortgage early is the most extreme. I’m not just talking about reducing your property’s square yard or house size. I’m talking about selling your home and buying another one that’s smaller and less expensive.

The earnings from selling your previous home will go to paying off the mortgage of your new house. This could still leave you with a huge sum of money. However, this tip is only applicable to real estate investors who are single or have a small family.

6. Make extra payments towards your principals

Recasting or refinancing strategies only work best for those who are sure to earn extra incomes every month. Yet, it shouldn’t stop you from making extra payments whenever you can. These extra payments on principals are advantageous to those in a financial bind because they can lower the interest rates imposed on their monthly mortgages

7. Put your windfalls into your mortgage

A lot of people waste their income tax refunds on buying unnecessary stuff when they could use that money to pay for their mortgage. Don’t make the same mistake. If you do receive a tax refund, keep that money and add it to your payment towards your principles.

8. Switch to a biweekly payment

In a sense, a biweekly mortgage payment doesn’t necessarily affect your monthly housing budget. But if you understand this strategy even deeper, you’ll find out that you’ll be able to pay 13 monthly full-sized payments instead of 12. This can help you pay off your mortgage balance 5 years early.

9. Try the dollar-a-month plan

This means adding a dollar to your monthly mortgage. If your salary constantly increases over time, add 5 to 20 dollars every month. This is another way to reduce the years on your mortgage by 8 years.

As long as the pandemic isn’t over, housing prices will continue to rise while interest rates remain low. This is a good opportunity as an investor because you’re given more time and means to pay for a house without taking up a lot of your monthly budget. And if you use the tips found above, you can always get the best deal for your monthly earnings.

Need more financial tips for real estate investment? Check these articles out!