Ready to Pay Off Your Mortgage? Here Are 7 Ways to Speed Up the Process

Row of traditional suburban homes and front lawns in nice neighborhood

The 30-year mortgage was created to make buying a home more affordable. With repayment spread over 30 years, you get monthly payments that fit your budget. However, spreading the loan over 30 years means you end up paying a lot in interest—sometimes hundreds of thousands of dollars in interest, depending upon the size of the loan and interest rate. Luckily, there’s something you can do about it—you can pay your mortgage off early.

Mortgage repayments are structured so that each month you pay interest on the money you owe (the principal), plus a portion to reduce the principal. Early in the loan period, most of the money you pay goes to interest. Each month a slightly larger portion goes toward the principal, reducing the amount of interest on the next payment. To speed up payment, you need to reduce the principal faster.

Before you jump into prepaying your mortgage, however, make sure there isn’t a prepayment penalty. When a mortgage has this penalty, it’s usually in effect during the early years of a loan and it will be disclosed in your loan documents. Often the disclosure is called “Addendum to the Note,” according to the Consumer Financial Protection Bureau. Paying off your mortgage early boils down to paying more toward the principal as soon as you can. Use a mortgage calculator to see how regular or one-time extra payments will affect your payoff period.

Now let’s look at some ways that you can chip away the amount you owe to pay off your mortgage sooner.

1. Refinance to a 15-year loan

If you have a loan for 15 years instead of 30 years, you pay about half as much interest, or possibly less because 15-year loans usually have a slightly lower interest rate than a 30-year loan. If you’ve had a 30-year loan for 5 years and switch to a 15-year loan, you end up paying off your house in 20 years and save a good deal of interest.

If you like the certainty of knowing exactly when your house will be paid off and how much you’re going to pay every month, a 15-year mortgage might be good for you. However, there are some drawbacks to this method for speeding up payments. First, refinancing isn’t free. You’ll have to pay all of the fees associated with taking out a loan, such as the application fee, closing costs, and an appraisal. That’s money you could be applying to the principal of your loan. You’ll also be locked into the higher monthly payment that a 15-year loan requires. 

2. Pay more every month

Another way to fast-track your mortgage is to simply pay more every month. If you get a raise and have an extra $100 each month in your budget, add that amount to your monthly payment and mark it “apply to principal.”

This is a no-fee, flexible way to speed up repayment. If you have an unexpected expense one month, you can skip the extra payment. If you get another raise, you can increase how much you apply to the principal each month. Paying an extra $100 each month will cut four years off the repayment of a 30-year, $250,000 loan at 4% interest (if you start as soon as you get the loan). You’ll also save nearly $28,000 in interest.

3. Pay biweekly

The idea behind a biweekly payment is to pay half of your monthly payment every two weeks. Because there are 52 weeks in a year, you end up making 13 payments instead of 12 each year, and the 13th payment can be applied completely to the principal. This may be particularly appealing if you’re paid every other week.

However, most lenders don’t accept biweekly payments, and services that offer to do this charge high fees. But you have options. If you want to make the equivalent of an extra payment a year, divide your current payment by 12 and add that amount to your payment each month. For example, if you pay $1,800 a month for your mortgage, you would add $150 each moth.

If you’re paid biweekly, half of your monthly mortgage payment could be direct-deposited in a dedicated account with each paycheck. Make your regular payment in months when you get two paychecks. When you get a third paycheck in a month, add the additional half-payment amount that’s sitting in your account to your regular mortgage payment. This eliminates the need to do any math and allows you to make the payment only when you have the money on hand, thanks to the third paycheck.

4. Pay more annually

If you’d prefer to make one large payment rather than 12 small ones, send an extra payment annually to your mortgage lender. This is another no-cost, flexible way to shorten your loan term.

If you like the biweekly-payment goal of an extra mortgage payment a year, that can be the amount you send annually. Or you can set a goal, like $2,000 a year, and set up automatic deposits into a savings account so you’ll have the money in the bank when you send it to the lender.

5. Use a windfall

Maybe you’re sticking to a budget without a lot of extra money to apply to a mortgage payment every month. You can still shorten the payoff time by applying “unexpected” money that comes your way. When you get a tax refund, make some overtime pay, or get a rebate, apply that money to your mortgage.

Making sporadic extra payments doesn’t allow you to target a specific date to pay off your mortgage, but it will still shorten the time and reduce the amount of interest you pay. The earlier in the loan you can pay down the principal, the bigger effect it will have overall.

6. Invest now, pay later

Paying off your mortgage early reduces the amount of interest you pay during the life of the loan, but it doesn’t increase your money. To increase your money, you have to invest it. If you have a specific date when you want to have your mortgage paid off, you can use any of these “pay more” strategies to work toward that goal. Alternatively, you can take the extra money you’d put into the mortgage and invest it for the same period, then use it to pay off the loan.

Ideally, your investment will have grown large enough to pay off the house and more. The drawback is that investments aren’t guaranteed. In addition to the ups and downs of the stock market, you may also face investment fees and income taxes on the gains you realize, so you need to weigh the pros and cons.

7. Have your house pay for itself

Could you do a short-term rental of your house to raise money to apply to the principal? You could try doing this regularly if you have an in-law suite available, or you could rent out your home while you’re on vacation for a week or two each year.

Many homeowners in Augusta, Georgia, famously leave town and rent their homes out to golf fans during the Master’s Tournament each year. The rental rate for the week sometimes covers several months of mortgage payments. If you’re in an area that attracts tourists or business people for a particular season or event, this option might provide funds to help shorten your mortgage.

Other considerations

While paying off your mortgage sooner is a noble goal, financial advisers suggest that your mortgage shouldn’t be your biggest concern. If you have credit card debt, a car loan, or student loans, they likely carry a much higher interest rate than your mortgage. It would be wiser to put any extra money toward paying off those debts rather than your mortgage.

There may be other expenses you should be saving for, as well, including retirement or a college fund for your children. You should also have an emergency fund or savings account to cover unexpected expenses. While your home is your largest investment, it’s also one that’s not easy to tap when you need extra cash. Putting all your money into your home, then having to take out a home equity loan to cover an emergency completely defeats the purpose of paying your loan off early.

Looking to save a little money at the same time? A home warranty could protect you against costly home repairs and appliance breakdowns. Check out our in-depth reviews to see which one may be right for you — all of them offer free quotes! 

Refreshing Kids Treat Recipes for Summer

child-1840067_1920It’s no secret kids adore the warm summer months. With school out of session and delicious produce in season, it’s easier than ever to prepare foods that your kids will eat with a smile. Serving up summer treats will keep your little ones fueled up for fun in the sun. The following recipes are sure to satisfy any kid’s appetite, while providing them with the nutrition they need.

Mango Yogurt Popsicles

It’s worth noting that many of the treats on this list are fairly easy to make. That doesn’t just mean they’ll help you save time. It also means you might want to consider getting the kids involved in prepping them. Experts point out that children who help out in the kitchen enjoy a range of benefits, from developing useful skills to expanding their palates.

This is an easy recipe to start them out on. All you need to do is peel and dice two mangoes. After you have, fill the bottom of popsicle molds (you can simply be small plastic cups with popsicle sticks for handles if you don’t have any molds) with yogurt and freeze for at least 30 minutes. 

In the meantime, combine the mangoes with the juice from one orange in a food processor. Then, create a syrup by stirring about ¾ cup of water with ¾ cup of sugar in a saucepan over medium-high heat until the mixture reaches a boil. Reduce to a simmer, wait about four minutes, then combine the syrup with the mango-orange mixture in the food processor. 

Put the mixture in the refrigerator and let it cool. Once it has, pour it into the popsicles molds and place back in the freezer, leaving them there until thoroughly frozen. When they are, remove them. You may need to dip the popsicles into a bowl of warm water (don’t submerge them all the way!) to loosen them enough that you can remove them from the molds.

Lemon Ice

Lemon ice is a classic summer treat that’s literally been around for thousands of years! Making your own is one of the best ways to appreciate just how refreshing this dessert can be.

It’s also not difficult at all. Start by mixing three cups of water with one cup of sugar in a saucepan until the mixture starts to boil. Boil uncovered for about five minutes, stirring frequently until the sugar has dissolved. Once it has, remove the pan from the heat, and stir in one cup of lemon juice and one tablespoon grated lemon zest. Pour into a baking pan and freeze uncovered for one hour, then cover the mixture and freeze for at least an additional two hours. Remove when it’s firm and serve in the cups of your choice.

Strawberry Lemonade

Summer treats should also include beverages. After all, your kids need to stay hydrated when playing out in the warm summer sun.

This strawberry lemonade recipe ensures they will. To make it, purée a pint of fresh strawberries in a blender with two teaspoons of sugar. In two glasses (adjust the recipe measurements depending on how many children you’re serving), add three tablespoons each of the strawberry purée, along with four tablespoons of sugar and four tablespoons of lemon juice. Add seltzer water for a little fizz. The result? A delicious summer beverage your kids will love!

Remember, making sure your children have a healthy and happy summer doesn’t need to be as demanding as you might think. These easy-to-make recipes will save you time while impressing your kids. That makes summer more enjoyable for everyone.