Statistics show homeowners achieve greater long-term wealth compared to those who don’t own a home. But a mortgage for 15 or 30 years can feel like an insurmountable hill to climb to finally own your home. With a bit of commitment, there are a few ways to pay your mortgage off much quicker than expected, build long-term equity, and better position yourself financially in the future.
Here are 3 top tips to owning your home sooner:
Biweekly payments: A biweekly payment is a plan where half of your monthly payment is made every two weeks, which is equivalent to one extra mortgage payment per year (13 payments rather than 12). This one extra payment per year can shorten your mortgage by up to 8 years depending on the term, interest rate, and when you started those additional payments.
Additional payments to principal or lump sum payments: Additional payments to your normal mortgage payment can shorten the term and allow you to build equity faster. This could be from time to time, with any number that fits into your budget. Every additional dollar adds up to more equity and owning your home sooner.
Refinance: Depending on the present terms of your mortgage and with interest rates at historical lows, it may make sense to refinance. This could mean a shorter term, a lower interest rate, or both. Presently there are over $4 trillion worth of mortgages that can benefit from a refinance. This is the easiest way to pay down your mortgage quickly along with the other strategies above.
The bottom line: Whether you make biweekly, principal, or lump sum payments, or refinance, the end result can shorten your mortgage term, increase your home equity, and bring you closer to owning your home sooner — all while achieving greater long-term wealth.
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