How To Pay Off Your Mortgage In 5 Years
Knowing how to pay off your mortgage in 5 years can provide tremendous financial relief. If you’re willing to work hard enough and have the means to make it happen, freeing up that extra cash each month will allow you to do things you may have otherwise never tried. You can put your extra funds toward other smart investments or that dream vacation you’ve been planning since college.
- Refinance. Refinancing your mortgage to a shorter term will force you to make larger monthly payments, but it will typically provide you with a lower overall rate. A shorter term can also provide that push you need to finish paying within your ideal timeframe.
- Reconsider your payment plan. Instead of making a mortgage payment once month, make the commitment to pay biweekly, instead. This doesn’t necessarily mean that you’ll have to pay double (unless, of course, you have the money and want to get it done even faster), but rather suggests that you can send in half of your monthly payment every two weeks. By committing to biweekly payments, you’ll end up having made the equivalent of an extra payment each year.
- Overpay every month. Biweekly payments sometimes come with an annual fee, if the fee is anywhere near that extra payment you’d be making, then overpaying may be your better option. By paying an extra 10 to 20-percent of your fixed rate, you can pay off your mortgage faster without the additional fees.
- Pinch your pennies. Frugal folks often get a bad rap for being cheap, but they’re also the least likely bunch to get stuck in a credit rut. Living like a college student for the next five years can only work to your financial advantage. The trick is pretending that you’re broke—even if you don’t make much money, spend like you earn even less. Make some extra cash by selling anything you don’t use (like that blender that’s been sitting in your storage closest for months now) on community-based websites. Wait to buy that shiny new car and put off purchasing the expensive home furnishings and renovations until you’ve met your mortgage goal.
- Record your expenses. Keeping a consistent record of your monthly expenses will allow you to pinpoint areas where you could potentially be spending less. Take a serious look at your food and entertainment budget; these are things that can easily be cut down with the right discipline. Overpaying for cable? Cancel with your provider and try a cheap monthly subscription to a movie-based company, instead. Spending too much at the posh organic food market? Trade in your luxury eating habits for the lowbrow fare at your local discount grocery store.