If you’re wondering how can I eliminate my mortgage?
You’ve come to the right place. We’ve rounded up everything you need to know about how to pay off your mortgage faster. According to a recent study, 26.4% of Americans have paid off their mortgage.
From having less debt to freeing up cash, there are several benefits to paying off your mortgage. Whether you want to
retire early or make other investments, paying off your mortgage can help you reach your goals.
In this guide, we’ll go over how to set a budget and a few easy ways to get your mortgage down. The mortgage world can be confusing. We’ll help you sort out the different ways to pay off your mortgage quickly.
The Importance of Setting Multiple Goals
Paying off your mortgage starts with setting a goal. Write it out and put it somewhere you’ll see it every day. Make it your wallpaper on your phone or computer. Put it on the fridge or on your desk.
Next, you’ll need to set smaller goals to help you achieve your end goal. If your end goal is to pay off your mortgage, think of this as an umbrella. Each of your smaller goals falls under the umbrella of helping you reach your end goal. It also feels good to check off smaller goals as you go.
Examples of smaller goals include saving a certain amount of money each month or paying a double mortgage payment twice a year. Another goal could be to cut a gym membership you aren’t using or to pay off a credit card. Each small goal will lead you to your larger umbrella goal of paying off your mortgage.
Create a Budget to See Where Your Money Is Going
Once you’ve set your goals, it’s time to create your budget. To start, write out all of your expenses and income. List every job and income stream you have along with when you get paid. Next, List every outgoing expense you have.
When it comes to expenses, you’ll want to separate them into two groups. The first are fixed expenses. These are things such as your mortgage payment, your car payment, and electricity. No matter what, you have to pay these bills.
Next, list out every additional expense you have. Donation payments, gym memberships, music subscriptions, and streaming services should all go into your budget. Once you see everything written out, you’ll have a clearer picture of what’s left.
If you don’t like what you see, it’s time to dive deeper and look at your credit card payments, bank fees, and interest payments. If you’re paying a lot of fees and interest on a credit card with a low balance, consider paying it off. This is where you’ll want to look at everything in as much detail as possible.
Make Some Cuts to Help You Pay Off Your Mortgage Faster
The next important step is to start making cuts. If you’re looking to pay off your mortgage quickly, you’ll need to get serious. Cutting non-essential expenses will help you reach your goal faster. Once you see everything written out in your budget you may be surprised at how much you’re spending.
You’ll likely see music subscriptions you didn’t know you had or group fitness classes you’re paying for and aren’t using. Now is the time to make the important cuts. If you’re paying for three different music subscription services, one will likely do.
Take a look at what you’re spending on eating out and entertainment as well. A $5 a day cup of coffee adds up to $1,825 per year. That could be an entire mortgage payment.
Here is where you’ll be able to free up a lot of income. Cutting a few bills and paying off small debts can save you hundreds of dollars a month. That money can go towards your mortgage payment plus additional principal.
Make Savings Automatic
Once you have your new budget and you’ve made some cuts, it’s time to get serious about saving. The easiest way to do this is to make saving automatic. One way is to automatically transfer a set amount into your savings account each month.
That extra money you’ve freed up from your budget will go a long way towards paying off your mortgage. Never underestimate how much a few cuts can add up to. Consider if you saved an extra $200 per month. That’s $2,400 a year towards your mortgage you didn’t have before.
If you’d like your extra savings to go directly towards your mortgage, you’ll want to set an automatic payment. Instead of putting it in your savings account, you make an additional payment on your mortgage for that amount. You can set these payments so that they automatically withdraw just like your mortgage payment.
The more you pay automatically, the less likely you are to spend it. With the money out of sight, it’s also out of mind. In addition, you don’t have to transfer it twice. There’s no need to put it into savings and then make an additional mortgage payment.
Double Down on Your Payments
The fastest way to pay off your mortgage is to double down on your payments. Making two mortgage payments a month will pay off your mortgage twice as fast. You can also set up bi-weekly payments. Instead of paying your mortgage monthly, you can pay an additional payment every two weeks.
The double down method could pay off your mortgage in half the time. Let’s say your monthly mortgage payment is $2,000. Paying $3,000 twice a month will add up to an additional $12,000 a year. That also reduces your interest.
If you previously had private mortgage insurance or P.M.I, paying more down will also get rid of this fee faster. Every penny you can take off your mortgage payment will help.
Refinancing to Pay Your Mortgage Off Sooner
Refinancing your mortgage can help you pay it off sooner. This is where Realfi Funding can help. A refinance is where you shorten the terms of your loan or change the terms to make it more favorable. Because you’re trying to pay off your mortgage, you’ll want to use a refinance to shorten the length of your loan.
If you’re interested in a mortgage refinance, you’ll apply as you would with a new loan. Once you’re approved your new loan payments will resume. You’ll have a lower interest rate and a shorter loan term to help you get your mortgage paid off faster.
Use Your Tax Refund or Bonus Payments
If you’re given a tax refund or bonus this year, put it towards your mortgage. Any extra money you receive from work or as a gift, use it to pay off your mortgage quicker. Make a plan for the money you know you’ll have coming in.
Any extra payments you can make will help you pay down your mortgage. Never underestimate how much payments of any amount can help. Every bonus, refund, or credit you receive while you’re paying off your mortgage will help.
Why Payoff Your Mortgage Sooner?
Paying off your mortgage helps to free up debt and monthly expenses. You’ll have less debt and more money each month for investing, saving, or retirement. You’ll also save money on interest and fees each month.
Without a mortgage, you’ll also have a better debt-to-income ratio. Your debt-to-income ratio refers to how much debt you have in relation to how much income you’re bringing in. The lower your debt-to-income ratio, the better in terms of credit and financial health.
Paying off your mortgage also allows you more freedom with your finances. You’ll have less debt to buy a second home, retire, or invest. You’ll want to keep in mind your own unique situation. Assessing your finances and goals will help you determine if paying off your mortgage makes sense for you.
Eliminate My Mortgage Today
Are you thinking it’s time to eliminate my mortgage? If you’re considering paying off your mortgage, we’ve got you covered. Our team of professional mortgage consultants can work with you on a refinance or other options to help you pay off your mortgage faster.
Paying off your mortgage will free up funds for other investments, buying a second home, or retirement. If you’re ready to get started on your new mortgage, fill out the contact form here. You’ll be put in touch with a mortgage pro who can help you reach your goals.