The idea of making mortgage payments for the next 30 years can be paralyzing, especially with the pressure of monthly household bills. You can spend a lot of energy trying to carve your mortgage down to size with insufficient results, particularly if your lifestyle conflicts with your debt-reduction goals.
There is no cookie cutter answer that fits everyone’s financial situation. However, here are three ways to boost your budget and reduce debt so you can pay down a mortgage faster:
- Refinance Your Auto Loan. With interest rates so low – hovering around 3% – an auto refinance could be a spectacular idea, especially if you want to pay off debts and are trying to come up with ideas about how to eliminate your mortgage faster. If your interest rate is above 6% and your loan isn’t completely upside down due to depreciation, consider refinancing. It’s fast, easy and straightforward, with generally minimal, if any fees. It could save you hundreds or even thousands of dollars over the life of your loan, contingent on your car and your loan specifics.
If you bought your car with a couple credit blemishes or didn’t have a good, steady credit history, you very well could have a high interest rate. But if your credit is healthier now and you’ve established some equity in your car, you may be eligible for a reduced rate. Even with a decent credit report, your dealer financing may have written your loan with a higher APR – money squandered on interest that could be saved and used to eliminate your mortgage. If you have a concrete credit record, talk to your lender about refinancing to a lower rate. Ask if there are any early payoff costs that could affect your refi. If they aren’t willing to work with you, begin shopping for lenders who will – it’s simple and there are many. Numerous credit unions do big business in auto loan refinancing and have the money to lend. Use this tip and the savings to eliminate your mortgage faster.
- Switch to Cash Back Credit Cards. Most budget specialists say to put credit cards away and use cash instead. While this plan can be effective, there is a way to use credit cards to your benefit and learn how to eliminate your mortgage faster. Credit card companies encourage usage by paying you back a percentage of the amount spent. It’s a competitive market, so you can find many companies providing great cash back rewards. If you have good credit, you can find programs with up to 5% cash back in specific categories and 1% cash back everywhere else.
Cash back credit cards are most valuable to consumers who pay their credit card bill off each month. Instead of writing multiple checks, put that money away and use a cash back credit card to pay your monthly bills. Use the cash set aside to pay your full credit card balance each month while realizing the benefits of earning extra income on money spent. Using the profits to pay off debts will help you pay off your mortgage faster.
- Make Biweekly Mortgage Payments. If you want to understand how to eliminate your mortgage faster, pay your mortgage biweekly instead of monthly. Many people stick with customary monthly mortgage payments, assuming that paying biweekly is a huge change or painful sacrifice. But it isn’t, and it can shave years off your mortgage and save you thousands of dollars in interest.
Here’s how it operates: Your regular monthly loan payment is split in half and paid every two weeks. Because there are 52 weeks in a year, you’re making 13 full payments instead of 12. The additional money you pay is used to reduce the principal on your loan, which can generate huge savings in interest, a lower overall home cost, earlier debt freedom and future financial security. For instance, on a 30-year $325,000 mortgage at 4%, you can keep for yourself more than $36,000 you would have paid in interest to the lender and pay off your loan 51 months in advance — that’s a game changer! Use the AutoPayPlus Biweekly Mortgage Calculator at www.autopayplus.com/biweekly-mortgage-calculator/ to play with altered new and existing loan scenarios.
AutoPayPlus can help you pay off your debt faster. Withdrawals from your account every other week sync with your paychecks and your monthly budget, while an additional half payment twice a year toward the principal lessens interest over the life of the loan. Please visit this website to learn more about how to eliminate your mortgage faster.