There is no better time to purchase a home like this time when current mortgage rates in California have significantly dropped and interest rates lower that they have ever been in history. This has enabled more people to buy homes without having to seek a heap of mortgage debt. Minimizing and eliminating debt in all areas of your life pays off a great deal. Therefore, if you have healthy savings, it makes sense to pay off your loan. However, clearing your debt is easier said than done. Most people find ways on how to pay off your mortgage faster so they can rid themselves off their debts and invest in other things.
Here are a few guidelines on how to pay off your mortgage faster.
Try refinancing to a minimal interest rate
Several people have not yet tried refinancing home loan despite its nadir rates. If you want to know how much you could save with refinancing home loan, utilize the refinance calculator. If you are planning on residing in your house for about 3 to 5 years and your mortgage is roughly $100,000, with 4.8% interest rate and above, consult your present loan lender for the best refinancing rate. Compare that rate with your existing interest rate; if your interest rate is reduced by 0.8 to 1%, then proceed and refinance.
Refinance to a shorter loan-term
Most people nowadays are shifting from long-term mortgages to short-term mortgages, even on a stringent budget. If you are on a 30 year fixed mortgage, you can refinance to a 15 year fixed mortgage plan. With the low current mortgage rates in California, you can do this and still retain your monthly payments averagely close to the present amount.
Make large payments
This is among the best strategies you could employ on how to pay off your mortgage faster. If you recently inherited a stash of cash or perhaps received a tax refund, consider investing some, if not all, of the money to your principal balance. And the best thing about it is that you don't have to make a hefty monthly payment. But first consult your lender to ensure that your early payment does not attract a fine.
Go from monthly payments to bi-weekly payments
You can reduce up to 6 years off a 30 year mortgage by simply paying half of your monthly payments within two-week duration. Moreover, you'll end up saving tens of thousands of dollars over the loan duration. All you need to do is connect with your lender and make them aware of the change in payment plan. You need to ensure that you have sufficient funds in your savings account.
Round off your payment
Every single payment you make towards your principal, no matter how less it is, will eventually count in interest. For example, if you are paying a monthly mortgage of roughly $887.23, you can round it off and pay $900 per month. That extra $12.77 that you put in will reduce your loan period by 5 months or even 1 year. This option is great for someone with additional money, particularly one who is refinancing or someone who is not eligible for refinancing home loan.
These guidelines on how to pay off your mortgage faster are bound to make a huge difference in your life. The sooner you clear the mortgage, the better. View the current mortgage rates in California before you refinance and do not hesitate to consult before making any decision.
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