How to Pay Off Your Mortgage Faster - and Why You Should!

A mortgage is a great way to get into the home of your dreams—without having to front hundreds of thousands of dollars. But a mortgage is a long-term financial commitment, and sometimes it can be difficult to imagine a time when your home will be paid off.

That's why you should have a plan to pay off your mortgage as quickly, and responsibly, as possible. Why pay earlier, you ask? It's simple: You'll save on interest costs, have more financial freedom and be the proud owner of your own property. Who doesn’t want that?

Why you should pay your mortgage off faster

It's a little known fact that making one extra principal payment per year on a long-term fixed rate mortgage can take seven years off of home loans. Seven years!

That's a huge savings, especially when you run the numbers and look at how much interest you would have paid over the full term.

And with interest rates lower than ever, now might be the perfect time to get a mortgage.

Interest rates are very low

Recently, Freddie Mac reported the lowest interest rates on mortgages in the agency's 50-year history. Interest rates like this don't last forever, so contact your preferred financial institution today, and ask what kind of mortgage would be best for you.

Steps to take

Once you've considered interest, it's time to create a plan. Whether it's your first home or not, learning how to pay off a mortgage early could save you tens of thousands of dollars in the long run.

Here's a rundown of how you can contribute more to your home loan payments.

Review your monthly budget

First, review your monthly budget and see where you can make subtle adjustments that free up some cash. It'll seem tricky, at first, but it'll get easier once you see just how much closer you're getting to owning your home outright.

Let's say, for example, you reduce your coffee shop charges by $15 per month. That's $180 a year that can go toward your principal payment. That may not seem like a lot on its own, but it's something. And changing a few more spending habits could help you save even more.

Review your debts

You're probably paying more on debt than you think, particularly when you factor in the interest fees. Paying down your debt faster will put more money in your pocket to go toward a mortgage.

If you’re able to pay off your credit card debt, for example, and you’ve been paying $50 per month—that’s $600 per year that you can now put toward a mortgage. That's a substantial amount of money. Combine that with the money you're saving on coffee and that’s $780 a year toward your principal. If your principal and interest payment was $1,500 a month, you'd be halfway there to making an extra principal payment each year.

Review your interest rate regularly

Another thing that can help you pay off your mortgage quickly is to have the lowest interest rate possible. We mentioned how low interest rates are right now, but you can also take proactive steps to attract lower rates--like improving your credit score, putting more money down or shortening the length of your loan.

If you already have a mortgage, talk to your lender about refinancing to a lower rate.

Visit with your loan officer to talk through your options

And finally, consider enlisting the help of a professional. A loan officer can be helpful in times like these. They can talk through what your housing needs are and how much you qualify for.

At the end of the day, no matter how big that number is, make sure that you consider your own budget—you're the one who knows how much you can feasibly pay each month.

If you need further advice or help paying off your mortgage early, Mountain America Credit Union can help you achieve your financial goals. Schedule an appointment today—we’re here to guide you forward.