When you think of what will get you on the far end, out of debt, most people think of paying down their credit cards first but the secret may be to pay down your mortgage debt as quickly as possible. By doing this you are ultimately saving money by avoiding higher interest and becoming mortgage free sooner in life. According to recent statistics released by CAAMP, only 35% of people with mortgages took advantage of attempting to pay down their mortgage faster. This means, majority of people are not taking advantage of their pre-payment privileges, or double up payment options. There are several reasons why this is so, part of it being many buyers are first timers and sometimes their new financial situation takes some adjusting and therefore they do not feel comfortable sparring the money for extra payments. Also, they may have incurred consumer debt and want to focus their extra dollars on paying that down and then focusing on their mortgage. Regardless of the reasons behind it, here are some helpful tips to help you pay down your mortgage quicker:
1. Increase your monthly/bi-weekly/weekly payment amount. By adding in that extra $100 dollars a month, can make a huge difference in the grand scheme of things. This could take a couple of years off your mortgage amortization, resulting in you being mortgage free sooner!
2. At renewal/switches/refinancing, keep your payments the same as they always were. For Example, if your new mortgage coming up is being offered at a must lower interest rate, if you are already used to paying a higher amount than that a month, simply put whatever is left over once principle and interest are deducted and add it back into the mortgage. You would be surprised at how this can also shed off a couple of years of amortization.
3. Always go with an accelerated payment option. By putting a couple of extra dollars a month/bi-weekly/weekly to your mortgage, you can potentially shed off years of amortization!
4. Last but certainly not least, do not forget to take advantage of your pre-payment privileges. Even if your pre-payment privileges are 10, 15, 20, 0r 25% doesn’t mean you have to put the full percentage down every year. You can put the full percentage or as little as you want. But every dollar counts!
To sum this post up, every little bit helps in cutting potentially years off your mortgage! Contact Robert Clancy today to figure out if your current mortgage allows you to do that!