Everyone who buys a house does so with the intention of eventually owning a house – even if it is not the one they just purchased – free and clear. And while the most common mortgage is the 30 year fixed, it takes most people far longer than 30 year to ever own a house due to moving and accessing the equity they build in their home. And an unfortunately large percentage of homeowners never manage to actually pay off their mortgage at all. So with that in mind, here are some tips for paying that mortgage down faster, giving you the opportunity to eventually live free and clear of a mortgage.

One of the most common strategies I have heard of is making extra payments. Sounds like a no-brainer, right? But there are a number of strategies to do this which help with the process and take the burden off of the homeowner to come up with extra money. The first option is bi-weekly payments. With bi-weekly payments, you pay half of your mortgage every other week, which usually coincides with your pay periods. But by doing this, you end up making an extra payment every year without ever feeling it in your budget.

Another common option is to pay a little more than the mortgage every month. So if you have a $1725 monthly payment, you might pay $1800 or $1900. This equates to an extra half of a payment per year to just over an extra payment per year. And again, you are simply budgeting in a larger monthly payment which usually offsets the difficulty of making extra payments.

The last way most people make extra payments is by making lump sum payments when there is extra income. This is common with high commission or bonus employees who may be able to make 2 or 3 large mortgage payments when they receive a larger than expected payout.

Another common option is to refinance into a shorter term mortgage. By lowering the term on your mortgage, you will pay the mortgage off faster and save yourself a ton of money in interest.

Something I have seen many clients do is pay down other debts as quickly as possible, and begin using the extra monthly inflows to make extra payments once those debts are gone. So if you have $30k in credit card debts costing you $500 a month, by eliminating that debt, you can add $500 per month to your payments without impacting your monthly budget. An alternative way to achieve this is with a cash out refinance, which allows you to consolidate other debts, reducing the obligation. So the $500 monthly obligation in credit cards may become a $250 additional cost in the mortgage, but if you keep paying the full $500 to the mortgage, you will see your principle shrink quickly.

As you can see, there are a number of ways to pay a mortgage down faster, but they all involve either restructuring your payment habits or your mortgage. And while this may seem difficult at first, a little self disciple and planning can save you years at the end of your mortgage and help you live more comfortably in retirement.

If you have any questions about how to implement these strategies, please contact me and I will help you work them out. If you have any other strategies you would like to add to help pay a mortgage down faster, please leave a comment.