In the present days, future retirees have a vital decision to make which could lay the foundation for future financial security during retirement, given the fact that majority of the homeowners have mortgage as the largest debt throughout their lifetime. While aging homeowners have the worry and concern of not being able to save enough money for their future, they are also anxious about paying off their mortgage loan which is the biggest liability and responsibility.
Retirees with mortgage debt are usually faced with the battle between crushing their mortgage and keeping their mortgage. The crowd of leveraged investors will all try to convince you about retaining your mortgage as they’re the ones who earn from you. So, lets’ read on the discussion which tells you about whether or not you should keep saving money or use it to repay your mortgage loan.
Paying off your mortgage loan faster
If you decide to repay your mortgage early, there are lots of advices on how you should get it done. It comes down to following the same 3 words, ‘pay more principal’. This is not a magic secret but you have to understand how it works. Paying off the mortgage principal before time is a good way of saving money as small debt reductions sum up dramatically over the life of the loan, thereby eliminating the payments in the interest rate of the loan. Here are few strategies to pay off loan fast.
- Add principal to the monthly payment: This tip is applicable only when your mortgage doesn’t have any pre-payment penalty. You can try to offer a one-time lump sum where you devote all your proceeds from the unused jewelry, motor home, selling a boat towards making mortgage payments.
- Bi-weekly payments: If you can’t make a single monthly mortgage payment per month, try to make half the payments every 2 weeks. As in 12 months, there are 52 weeks, this cause 26 half-payments or 13 full payments instead of usual 12 payments and there is one extra payment in a year. You can use a bi-weekly mortgage calculator to compute payments.
- Refinance to a low rate: One more strategy is to refinance to a low interest rate mortgage while maintaining the same term of your mortgage loan. The key is not to take any money out or to elongate the term of the refinance loan. Make sure that the new loan offers a low payment with the decreased cost of interest.
- Refinance to a short term: Yes, this would definitely mean larger monthly payments, but at the end of the day, you don’t have to pay those extra costs on interest rate. Make sure you pay back the loan as soon as you can even if that means compromising on some of your favourite things and daily habits.
Therefore, if you’re a senior and if you’re wondering about the ways in which you can pay off your mortgage sooner in order to become debt-free, you can take into account the above mentioned tips and strategies.