The idea of making mortgage payments for the next three decades can be petrifying, and even more so when added to the burden of monthly household expenses. You can devote a lot of effort trying to cut your mortgage down to size with meager outcomes, especially if your lifestyle choices conflict with your debt-reduction goals.
There isn’t a cookie cutter solution that fits everyone’s financial condition. But, here are 3 ways to assist in strengthening your budget and downsizing debt so you can eliminate your mortgage faster:
- Refinance Your Auto Loan. With interest rates so low – hovering around 3% – an auto refinance could be a great idea, specifically if you want to pay down debts and plan how to eliminate your mortgage faster. If your interest rate is above 6% and your loan is not upside down due to depreciation, take a good look at refinancing. It’s swift, easy and relatively painless, with usually minimal, if any fees. It could save you hundreds or even thousands of dollars over the life of your loan depending on your car and your loan terms.
If you acquired your car with some credit flaws on your credit report or had basically no credit history at all, you most likely have a high interest rate. However, if your credit is improved now and you’ve built up a little equity in your vehicle, you may qualify for a reduced rate. Even with a moderate credit report, your dealer financing may have set your loan at a higher APR – money wasted on interest that could be saved and used to eliminate your mortgage. If you have a solid credit record, talk to your lender about refinancing to a lower rate. Inquire if there are any early payoff consequences that could affect your refi. If they are not willing to assist you, start shopping for lenders who will – it’s easy, and there are a lot to choose from out there. Many credit unions do big business in auto loan refinancing and have the money to lend. Use the savings and the tactic to eliminate your mortgage faster.
- Switch to Cash Back Credit Cards. Many personal finance gurus will tell you to put credit cards away and use cash instead. While this strategy can work, there is a way to use credit cards to your advantage and learn how to pay off your mortgage faster. Credit card companies promote usage by returning you back a percentage of the sum spent. It’s a competitive market, so you can locate many companies providing terrific cash back rewards. If you have great credit, you can qualify for programs with up to 5% cash back in bonus categories and 1% cash back everywhere else.
Cash back credit cards are most beneficial to consumers who pay their credit card bill off every month. In place of writing multiple checks, leave that money aside and use a cash back credit card to pay your monthly bills. Utilize the cash set aside to pay your complete credit card balance every month while enjoying the benefits of earning extra income on money spent. Then use that money to pay off debt and help you pay off your mortgage faster.
- Make Biweekly Mortgage Payments. If you want to figure out how to pay down a mortgage faster, pay your mortgage biweekly opposed to monthly. Plenty of people stick with traditional monthly mortgage payments, thinking that paying biweekly is a big change or difficult sacrifice. But it’s not, and it can decrease years off your mortgage and save thousands of your dollars in interest.
How does it work? Your fixed monthly loan payment is divided in half and paid every two weeks. Since there are 52 weeks annually, you end up making 13 full payments as opposed to12 by the end of the year. The additional money you pay is applied to decrease the principal on your loan, which can produce huge savings in interest, a lower overall home cost, earlier debt freedom and future financial security. For example, on a 30-year $325,000 mortgage at 4%, you’ll get to keep more than $36,000 in interest and pay off your loan 51 months sooner — now that’s a game changer! Use the AutoPayPlus Biweekly Mortgage Calculator at www.autopayplus.com/biweekly-mortgage-calculator/ to play with various new and existing loan scenarios.
AutoPayPlus can assist you in paying down debt faster. Withdrawals from your account biweekly fit conveniently with your paychecks and your monthly budget, while an extra half payment twice a year paid toward principal reduces interest over the life of the loan. Please visit this website to learn more about how to pay off your mortgage faster.