Everyone needs a place to live, but the prospect of paying a large mortgage payment every month for fifteen to thirty years can be a little overwhelming to most people. As a homeowner with a thirty year mortgage myself, I can honestly say making that payment each month gives me a slight case of anxiety. That’s why I try really hard to find ways to pay extra on my mortgage throughout the year so I can pay this big debt off early. Below are six ways I’ve found to pay extra on my mortgage without really hurting my pocketbook.
Before Making Extra Payments
Most lenders don’t have a problem with anyone making additional or extra payments on their mortgage. However, some might charge a penalty for making extra or early payments so it’s important to check with your mortgage company or bank to find out if you can pay ahead without penalty. Do this before you make any extra payments.
1. Every Little Bit Helps
Add an extra little bit to each month’s payment. Even if it’s just $15 or $20, every little bit helps. The extra you send will automatically go to principle so you pay the loan off faster. If you use a coupon book, there is probably a line on each coupon especially for the “extra” sum you’re paying.
2. Double Up!
If you can afford to do it, make a double payment four times a year. Did you know that simply paying one extra payment a year can knock almost nine years off the length of your mortgage? When you make the extra payments, ask your lender for a statement so you can see how much you still owe. You’ll be amazed at the difference!
3. Tax Time!
If you get a tax refund, put it toward your mortgage. That once-a-year extra payment will make a huge difference in the length of your loan without taking money out of your pocket.
4. Bonds & CDs
Have money invested in bonds or CDs? When they mature, instead of reinvesting, put the earnings, the principle, or both towards your mortgage. After all, your home is worth investing in, too!
5. Bonus!
If you’re lucky enough to work for a company that offers annual bonuses, you can use it to pay extra on your mortgage. I know it’s tempting to use that money for a vacation or some other fun thing, but paying your mortgage off faster is definitely the best money-saving idea in the long run.
6. Windfall
Maybe you inherited some money, or won a large sum playing poker. If you suddenly come into some unexpected money, send it directly to your mortgage holder. You weren’t expecting it anyway, so you won’t notice it’s gone – but you will notice a difference on the loan.
The good thing about all these suggestions is none of them require a huge commitment on your part, and you don’t have to have permission from your lender to make them work. Just be sure to ask about pre-payment penalties and then get to work on cutting the mortgage down to a more manageable size.
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