Having the opportunity to purchase a home is a true experience, there are a ton of emotions that you will go through during the process, and when you get the keys to your new home it is like you’ve reached the finish line. Congratulations you have become a new homeowner, but now let’s move on to the next part; getting your home paid off as quick as possible.
More than likely a mortgage is going to be one of the biggest financial decisions that you make throughout your life and in most cases tends to be the most expensive. There are ways that you can help eliminate the amount of interest that you pay over the life of your loan, so let’s cover a few.
It is highly recommended that you try and make at least 1 extra principal and interest payment every year. The amount of interest paid on the mortgage goes based off of the principal balance, so naturally when you make 1 extra payment towards your principal balance every year it will reduce the amount interest you will pay over the mortgage.
Another tip that is recommended is rounding up on your mortgage payment. So for example, if your mortgage is $1217, if you can afford to do so try and pay $1300. The extra $83 dollars a month equals an extra $996 towards your principal every year, and reduces the amount of interest that you pay.
Set up bi-weekly mortgage payments, by doing so you make 1/2 of what your payment is 26 times a year which equals 13 full mortgage payments, and adds up to the 1 extra payment a year, similar to what was mentioned above.
Ultimately the choice is yours on if you can swing the extra payments, but remember by doing so you can cut the amount of interest you pay and own your home years sooner than your loan term.
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