Tips for a Quicker End to Your Mortgage

If you're serious about paying off your mortgage quickly, realize that every dollar you add to your regular payment each month puts a bigger dent in your principal balance — and you don't have to double-down to make a difference. Adding even one extra payment each year knocks years off your mortgage.

Here are some options for paying extra and how those extra payments affect a 30-year mortgage.

Switch to a biweekly payment

1. Instead of making one monthly payment, you can make half-sized payments every two weeks.
2. If your usual mortgage payment is $1,000 a month, pay $500 every other week.
3. This will have nearly the same impact on your budget as one monthly payment, but because there are 52 weeks in a year, a biweekly payment schedule will result in 13 full-sized payments a year instead of the normal 12.
4. You'll be making an entire extra payment every year without having to scrounge around for the extra money.
5. If you have a 30-year, $200,000 mortgage at an interest rate of 5%, making biweekly instead of monthly payments will save you $34,328 in interest and allow you to pay off the loan almost five years earlier.

Make extra principal payments

1. You can send in an extra payment when you make your monthly payment and mark it principal only.
2. This payment will go to pay down the principal rather than both the principal and interest on the loan.
3. Paying down even a little bit of extra principal early on in the loan can save you quite a lot in interest charges AND get you out of the loan several years ahead of schedule.
4. Consider sending just a little extra to the loan holder every month as an extra principal payment, like if you have an odd payment amount like $1,046 per month, round it up to $1,100 and dedicate the extra bit as a payment on principal.
5. Even though it's just an extra $50 or so a month, the principal payments will add up faster than you'd believe.

Refinance into a shorter-term loan

1. If you've got a 30-year mortgage, refinance it as a 15-year loan.
2. You'll probably get a better interest rate as well — shorter loans often mean lower interest rates.
3. Thanks to the shorter time frame, you'll pay a lot less in interest.

Of course, paying off a mortgage isn't always necessary. If you have a very low rate, you may think that you get a better financial payoff by putting all your extra money into investments instead. That can be a wise move — put extra cash into retirement accounts or other investments and let the mortgage run out on its own.

As you plan, keep in mind that tax rules, the particular terms of your mortgage, and your overall financial situation can change the equation. Be sure to discuss your plans with a financial professional.

Are You Worried About Overpaying on Your Next Home?

When buying a home, one of the most important considerations in our choice of property and a critical component of the purchase process is the price. With home prices continuing to rise as the market regains traction, it is more important than ever to be informed regarding the financial considerations to avoid paying too much for your next home.

Follow these six important strategies to help keep from overpaying on your next home.


1. Research the comps. To know what the right price should be for a home, you first need to know what similar properties are selling for in that area. You will want to look at homes that are similar in size and condition. The comparable sales data or comps will give you recent sales information. Make sure to find at least three relatively similar properties in the neighborhood that you are interested in - your Realtor will be able to assist you in finding the correct data.

2. What is the right price for you? The right price for each buyer is going to vary. We all have different thresholds for which we are willing to pay and different amenities that are important to us. Sometimes paying a little more will make sure that you don't lose out on your dream home. However, always keep your bottom line in mind.

3. Shop around for your mortgage. Fees and interest rates vary from lender to lender. Take the time to compare before you decide on the lending institution. This could save you considerably each month on your mortgage payments.

3. Research current events. Find out as much as you can about the neighborhood, the town and the city. It will make a significant difference in the price of a home if there are plans for new schools or if there are negotiations in the works to put a highway overpass close by. You will want to make sure that you don't have any surprises. Also, if applicable, look into the Homeowner's Association, its rules and fees.

4. Have an appraisal. If your appraisal comes in lower than the negotiated price, an appraisal contingency will ensure that you aren't overpaying. You may need to renegotiate the price with the seller or you will have to come up with the difference.

5. Always have a Realtor. A professional real estate agent who is representing you as a buyer will have first-hand, expert knowledge of the local housing market. Realtors' expertise in market conditions and knowing what constitutes a fair price and their ability to represent you in a bidding war could be invaluable.

6. Avoid a bidding war! Don't get trapped into a price guessing game with other buyers for the same property. Don't change your bid. Instead, be preapproved for your mortgage and make a strong initial offer.

While buying a home can be an exciting challenge, you don't have to overpay. Contact me today for more information about the home buying search and what your local market is saying.