Millions of Americans are currently stuck in a mortgage situation that they hate. They either owe too much money or are behind on their payments. This situation can be stressful and leads to divorce and health problems on a regular basis. But Americans are not destined to be stuck in hopeless mortgages for the entirety of their lives. Instead, it is certainly possible for a person or family to pay off their mortgage on a reasonable time frame. This mortgage payoff depends on the original amount borrowed as well as the decisions that a person makes in the first five years of having their loan.
Start off Small
One of the most important steps to paying off a mortgage is to make sure that the mortgage is relatively small in the first place. There should be rules and guidelines in place during the borrowing process so that a borrower does not take on more than they can pay over a long period of time. One common rule is that people should not borrow for their home more than one-third of their take home pay. In that case, they can easily put more money towards their mortgage if they have a raise or some other method of gaining money. Mortgage calculators can be helpful in determining these amounts. Borrowers should also keep in touch with their local real estate agents. These men and women can help guide them to homes that can meet all of their needs for the lowest price possible. By compromising on features and location, it is possible for a person to buy a smaller house and keep their overall goal of paying off their mortgage as quickly as possible.
Keep Other Expenses Low
Paying off a mortgage quickly is in some ways a zero-sum prospect. A borrower can only achieve this difficult goal by bringing in more income than they spend on other purposes. Borrowers that spend as little as possible int heir budgets have more money that they can put towards their house and therefore pay off that house faster than they would have otherwise. A number of different approaches can aid in this goal. Borrowers who want to pay off their mortgages need to drive used cars and temporarily cut down on luxury purchases. They need to hold off on buying the newest and most expensive electronics on the market. These men and women also need to reduce the vacations they go on. Obviously, these steps are not necessary if they have enough money in their budget to amplify their mortgage payment and pay off their house in five years. But if not, they need to take this important step.
Invest and Save your Money Wisely
Investing money can be a helpful tool for reducing a mortgage burden. Many passive and low-risk investments can have a decent return that may help a family save for retirement while also allowing for increased mortgage payoffs. Some families have brokerage accounts for surprise payments and emergencies. The brokerage accounts may make a substantial return that a family can then put towards their mortgage payment. It is recommended that families only keep a small portion of their savings in these accounts. There is always the chance that they will lose money and will not be ultimately helpful for paying off a mortgage.
Always Consider Refinancing
Refinancing is a tool that many homeowners can use to reduce the amount that they owe on their home. The interest rate is just one part of the large pile of money that a family has to work through in order to pay off their mortgage in five years and also how to pay off a 30 year mortgage in 15 years. Lowering that interest rate can make the pile smaller and can make the sacrifices for paying off the loan easier. But borrowers must be careful. They must ensure that they are not paying fees and excessive closing costs that can make a payoff in five years and even more difficult than it would have been otherwise. Research and mortgage calculators can make this process significantly easier.
Use Tools to Learn How to Pay Off Your Mortgage Faster
Knowledge is one of the most essential tips to learn how to pay off your mortgage faster. Knowing how much one owes and how on track a person is can be extremely important to saving, planning, and investing. A wide variety of tools are available on the internet to figure out how much a person owes and how they should pay. The tool on ChopMyMortgage.com is one of the simplest and most direct. It shows the payments one must make in order to pay off a mortgage on time or early. It can also show how quickly a person will pay off their mortgage if they pay a certain predetermined amount per month. This knowledge can certainly help a borrower when they are making the daily financial decisions that drive their lives. It can help them determine which car to buy or which hotel to stay at on a vacation. Tools like ChopMyMortgage.com can also help a borrower determine if they need to put more or less money towards their regular mortgage payments in order to meet their goals.The Wells Fargo Early Mortgage Payoff Calculator has the same purpose. It allows a person to shift the amount of their down payment and the size of their eventual purchase. This Wells Fargo Early Mortgage Payoff Calculator also lets a person figure out how much they need to pay per month in order to remove the need for mortgage insurance. Removing the private mortgage insurance requirement helps an individual secure a lower overall monthly payment and can eventually help them meet their goals.
Conclusion
Paying off a mortgage in five years, or even learning how to pay off a 30 year mortgage in 15 years, is an exceptional feat. It requires a great degree of concentration and sacrifice. People have to learn how to live within their means and understand all of the particulars surrounding their finances. With adequate knowledge and a little luck, it is possible for practically every homeowner to pay off their mortgage and gain full control over their financial situation.
About Tim Schmidt
Tim Schmidt is an Entrepreneur who has covered retirement investing since 2012. He started this website to share his expertise in using his Self-Directed IRA. Most recently he's been advising individuals to diversify into precious metals ahead of a certain recession. He invested with Goldco.