A Great Way to Pay Off a 30-Year Mortgage Early

If you are about to purchase a home and are planning on taking a 30-year loan to buy the house, you should know that you could pay off your loan early if you make extra payments on your loan. Not only is this a great way to pay off a loan early, but it is also a great way to save money on the total cost of the loan. Here are a few things you should know about this.

Method

There are many ways to pay extra money on a mortgage loan, and all will help you pay off your loan early, but one of the best methods is to make biweekly payments. When you do this, you will be paying half of your loan payment every two weeks. So, if your mortgage payment is $1,000 per month, you will pay $500 every two weeks.

By doing this, you are actually making one extra payment each month. This is because if you pay every two weeks, you will be making 26 payments. Each payment is only half of the actual payment, but this still means you are making 13 payments over the period of a year instead of 12.

By doing this, you will be paying off your loan faster, and therefore you will pay less interest in all. If you begin using a biweekly system to pay your mortgage, you could cut six years off your loan. This means that in 24 years, you will pay off your entire 30-year loan.

Refinancing

In addition to using the principle listed here, you might also be able to pay off your loan early by refinancing. Refinancing is not always a good option, but it can be wise to do if you can get an interest rate that is 2% lower than the one you have. If you decide to do this, you should also make sure that you do not extend your loan time at all.

For example, if you currently have 20 years remaining on your loan, do not take out a 30-year loan. Instead, take a 15- or 20-year loan instead. This will help you stick with your schedule of paying off your loan as quickly as possible.

If you are interested in getting a mortgage loan, contact a lender such as MCS Bank to find out your options, the available rates, and the available loan programs that might be good for you.   

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