When you were signing the papers to finalize the purchase of your house, you might have sold your freedom. It might seem like an exaggeration, but it is just like people feel when getting a mortgage. With a thirty-year loan, you are bound to feel it dragging behind you like a ball and chain, weighing you down.
Naturally, you want to be rid of that debt, but unless you hit the jackpot, you might find it impossible to pay off the thousands of dollars you owe. It is not the end of the world, though! Instead of giving up, you can use five smart strategies to pay that mortgage off and regain your financial freedom. Do you want to know what the said strategies are? If so, keep reading!
Make Bi-Weekly Payments
It does not matter whether you got a mortgage to buy a Ki Residences apartment or a luxurious house in Palm Beach – you can pay it off faster by making bi-weekly payments instead of regular monthly payments.
It is a small change, but it can make a huge difference when it comes to your mortgage payment schedule. After all, you will be making more than twenty payments per year instead of just twelve payments per year.
It is an ideal strategy for people who are not struggling financially and can afford to make mortgage payments each month. You just need to look into your budget, see where you can start spending less and allocate the saved money to the mortgage.
Refinance Your Mortgage
Have you been thinking about refinancing your mortgage? If so, it is the perfect time to do it! You can get in touch with specialty lenders that offer refinancing programs just for people who want to get rid of that mortgage debt.
The best thing about refinancing your mortgage with that type of lender will allow you to obtain a lower interest rate, which can be helpful if you have a low credit score and are struggling with making monthly payments.
The other benefit of refinancing is that you can increase and decrease the length of the loan. Some people are not comfortable with long-term loans. For instance, if you have kids that will be going to college in five years, you might want to pay off that loan in four years. In such a situation, refinancing is an excellent option!
Recast Your Mortgage
What about recasting your mortgage? In short, it requires you to pay a lump sum toward what you owe. Once you do that, the mortgage lender will calculate a monthly payment based on the reduced balance. It will allow you to pay off the loan faster and cut down on the number of remaining monthly payments.
Now, imagine that you came into possession of a large amount of money. You can allocate that money into the mortgage, and, in return, the mortgage lender can make the monthly payments lower. If you want to pay the loan off as soon as possible, the mortgage lender can make the monthly payments higher, which will reduce the length of the loan significantly.
Budgeting for Extra Payments
While it does not sound that interesting, budgeting for extra payments is definitely a smart idea. You just have to cut corners somewhere in order to afford it. Unlike with the bi-weekly payments strategy, you will focus on making extra payments whenever you can afford it.
For instance, if you spend $500 on groceries per month, you could reduce that number to $400 and devote the $100 that you saved up to the mortgage. Or, if you spend $100 on going out with friends on the weekends, you could cut that number in half and add $50 to the mortgage payment. It is up to you!
Get a Side Hustle
Lastly, you could use your free time to earn extra money and get a side hustle. For example, if you like walking dogs, why not offer that service to your neighbors? Or, if you possess some useful skills, such as web design and writing, you could offer such services online and advertise yourself by hanging posters around town.
In other words, you have quite a few options to choose from! All you have to do is decide what works best for you and start working towards achieving financial freedom!
To sum up, you can repay your mortgage faster by refinancing your mortgage and budgeting for extra payments. Other than that, recasting it and making payments on a bi-weekly basis is always an option!
If you put just one of the ideas listed above into action, it will reduce the amount of time it will take you to pay off that loan significantly. Instead of struggling with financial problems, you will be able to regain control of your finances and enjoy the benefits of being debt-free in no time!