If you are a homeowner, then you know that what it feels like to have a mortgage. Although a mortgage
loans comes with a lower interest rate but having a lower rate for a longer period can still make a huge
amount of interest that you have to pay on the principal amount. A homeowner always wishes to see
the time when he would pay his last mortgage payment, this is the dream of most of the American
homeowners. According to reports, almost 90% of American home owners buy a mortgage of 30 years.
This a long time for which you have to pay the interest.
So, it is wish of most of the Americans to pay the mortgage faster, so today I have come up with some of
the ideas that you can use to pay off your mortgage faster. These tips and tricks are simple and you just
need determination to do it. I am sure you will be able to pay the debt before time, if you stick to the
plan. So let’s start,
1- Use Debt Snowball Payments
You cannot proceed well without a plan, if you have a consumer loan, then the first thing you need to do
is to pay that off because consumer loans often come with a higher interest than a mortgage. Use Debt
snowball method to pay your consumer loan and when you are done with it, use all the amount of
money that you were using to pay your snowball debt payments in to your mortgage.
So if you have paid all your consumer debt recently, then do not waste that amount and put that in to
mortgage payments. This will make a significant impact on your debt and you will be able to pay it off
faster. This is the amount that you are already saving every month so if you are done with consumer
debt, do not increase your expenses and put the amount to pay mortgage.
2- Create a Challenging Budget
It is always important to create a budget and track down your expenses, it will help you to manage your
money in a better and organized way. When you are on the road to pay off the debt, make a challenge
everything budget, this is a kind in which you challenge yourself to spend the minimum amount of
money in every category of the budget. This budget will require to cut down your expenses to the
minimum amount. You will have to give the fancy living and start living a simple and cheap life. To make
a challenge everything budget, you will have to cut down your cable TV and gym subscription and look
for cheap alternatives. You will also to reduce your entertainment expenses and cut down your dine
outs till you pay off you debt. Try to negotiate on your insurance cost and reduce the energy cost as
much as you can by installing those electronic gadgets that consume less electricity.
When you will save all this money, you can put this amount to pay off your debt. This can decrease the
time of your loan significantly.
3- Work With More Than One Job
In order to pay off any kind of debt, you need to increase your income and for that you have to go for
more than your primary job. Increasing you income requires you to get out of your comfort zone and
work. There are a lot of side hustle jobs that you can take to earn money and the best thing about most
of the side hustle jobs is that you can work whenever you want, there is no requirement of time. For
example, you can work as a doordasher with DoorDash or you can drive your car with Uber and Lyft. You
can also freelance your skills and services on platforms like Fiverr or Upwork. You can do babysitting job,
pizza delivery or bar tender jobs. Thus there are hundreds of different jobs and ideas that you can take
to earn money. So you should pick two or three ideas and start working on them.
We have talked about refinancing in the student loans as it is not good all the time to refinance in a
student loan but a mortgage loan is much different from a student loan. So if you want to pay your
mortgage faster, refinance is one of the step that can make a difference. According to a survey, the
average price of a house in US in the year 2019 was $329,750. So if you take a loan of this amount and
buy a house with an interest rate of 4.5% then you would have to pay a total interest of amount $
445,162 in these 30 years in the form of interest. If you take the same loan for a time period of 15 years
then you will have to pay the total interest of $222,581 in the life of the loan. This is almost of half of the
interest amount although you will have to make a slightly higher payment every month but you will save
a lot of money and you will be free from the slavery faster. One thing to keep in mind is that the interest
rate is slightly lower on a mortgage of shorter term. So if you want to save a big amount as $222,581
then you should be thinking to refinance on a shorter term loan.
5- Sell Extra Stuff
The next thing you need to do to pay off your debt is to sell anything extra that you have. This will bring
a lot of useful cash that can be used to pay off debt. Many Americans have their closet full of clothes
and their garages are full of stuff that they do not use. This type of stuff is taking a lot of extra space in
your home and you should start decluttring in order to free up some space and make money. This will
increase the beauty of your home and your financial picture too. You can use many online sites and
platforms like Decluttr, eBay and Amazon for this purpose. Other than that there are local marketplaces
such as Facebook and Craigslist etc that you can use.
Doing this can take some time but make sure to put all the payment in to your debt so that you could
take benefit from this!
6- Add Some Amount to Your Principal Payments
This is one of the trick that can reduce the time of your loan significantly. You can reduce the amount of
interest paid and also the time taken. You have to calculate your budget and make some amount that
you can use to increase the amount of principal payment every month. It is not necessary that it should
be a big amount, you can add an extra $100 every month to increase the amount of principal payment
and then after sometime, increase the amount that you are paying, find new ways of earning money or
cut down your expenses and put more and more amount to your monthly debt payment. But make sure
you pat an amount that you can afford, otherwise there could be issues for you. So calculate your
finances well before you make a start. This increment can be an effective move if you increase the
7- Downsize to a Smaller Home
Although this does not sound that good but if your goal is to go debt free as soon as you can than this
could be one of the effective option. You can save a lot of money when you shift to a smaller house and
your expenses decrease gradually. By this way you will save more money and will be debt free soon.
Once you are debt free, you can save money for a bigger home easily and buy your next and bigger
home on cash. Thus this can be an effective way to save a lot of money.
Do comment in the section below and let us know if you have any queries regarding the article because
we would love to hear from you. Best of luck!