Do you want to pay off your mortgage faster, but you’re not sure where you can find the money in your budget to do it? The idea of making mortgage payments for the next 30 years can be paralyzing, especially if added to the burden of monthly household expenses. You can spend a lot of effort trying to whittle your mortgage down to size with meager results, especially if your lifestyle conflicts with your debt-reduction goals. There’s no cookie-cutter solution that fits everyone’s financial situation. But here are 3 effective debt hacks that can help you pay off your mortgage faster.
Here are 3 debt hacks to boost your budget and downsize debt:
Debt Hack 1: Refinance Your Auto Loan
With interest rates so low – hovering around 3% – an auto refinance could be a great idea, especially if you want to pay down debts and figure out how to pay off your mortgage faster. If your interest rate is above 6% and your loan is not upside down due to depreciation, investigate refinancing. It’s quick, easy and painless, with usually minimal, if any, fees. It could save you hundreds or even thousands of dollars over the life of your loan depending on your car and your loan terms. If you bought your car with a few negative credit blemishes or had no credit history at all, you likely have a high interest rate. But if your credit is healthier now and you’ve built equity in your car, you may qualify for a reduced rate. Even with a decent credit report, your dealer financing may have set your loan at a higher APR – money wasted on interest that could be saved and used to eliminate your mortgage. If you have a solid credit record, talk to your lender about refinancing to a lower rate. Ask if there are any early payoff penalties that could affect your refi. If they are not willing to work with you, start shopping for lenders who will – it’s easy and there are many. Many credit unions do a big business in auto loan refinancing and have the money to lend. Use the savings and the strategy to eliminate your mortgage faster.
Debt Hack 2: Switch To Cash-Back Credit Cards
Most budget experts say to put credit cards away and use cash instead. While this strategy can be effective, there is a way to use credit cards to your advantage and learn how to pay off 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 offering great cash-back rewards. If you have great credit, you can find programs with up to 5% cash back in bonus categories and 1% cash back elsewhere. Cash-back credit cards are most beneficial to consumers who pay their credit card bill off every month. Instead of writing multiple checks, put that money aside and use a cash-back credit card to pay your monthly bills. Use the cash set aside to pay your full credit-card balance every month, while reaping the benefits of earning extra income on money actually spent. Using the profits to pay of debts will help you eliminate your mortgage faster.
Debt Hack 3: Make Biweekly Mortgage Payments
If you want to know how to pay off your mortgage faster, pay your mortgage biweekly instead of monthly. Most people stick with traditional monthly mortgage payments, assuming that paying biweekly is a big change or painful sacrifice. But it’s not, and can shave years off your mortgage and save thousands of dollars in interest.
Here’s how it works: Your regular monthly loan payment is split in half and paid every two weeks. Since there are 52 weeks in a year, you’re making 13 full payments instead of 12. The extra money you pay is applied to reduce the principal on your loan, and that can generate huge savings in interest, a lower total cost of your home, earlier debt freedom and future financial security. For example, on a 30-year $325,000 mortgage at 4%, you can save more than $36,000 in interest and pay off your loan 51 months earlier — that’s a game changer! Use the AutoPayPlus Biweekly Mortgage Calculator to play with different new and existing loan scenarios.
AutoPayPlus can help you pay down debt faster. Withdrawals from your account every other week fit conveniently with paychecks and your monthly budget, while an extra half payment twice a year toward principal reduces interest over the life of the loan. Please visit our website to learn more about how to pay off your mortgage faster.