If there’s one thing we all need more of in our lives, it’s money hacks! Right? Who couldn’t use a little extra cash in their lives! Today we’re sharing money hacks to help you pay off your home quicker. After all, for most of us, it’s our biggest monthly expense. When you’re looking for ways to pay off that mortgage quicker, you really have to look at the big picture. Knocking one year off your loan today when you still have 28 to go may not sound like a lot, but 27 years from now, you’ll be happy you did it! Check out our favorite money hacks to pay your home off quicker.
Money Hacks to Pay Your Home Off Quicker
Divide and Conquer
What is the definition of divide and conquer? It means that you should pay a little extra each month. Every dollar you add to your payment makes a bigger dent in your balance but adding one extra payment each year knocks four years and nearly $17,000 off your mortgage.
Throw in an Extra Andrew Jackson
Put Andrew Jackson to work by adding $20 to your mortgage payment each month. You’ll pay off your mortgage in a year and a half early, saving over $6,200.
A lot of people receive sales bonuses, cash gifts, or tax refunds each year. If you can put them towards your mortgage, you can shave many years off your loan. Even if you put half towards the loan, it’s still something.
Sign Up for Bi – Weekly Payments
It allows you to make a half – payment every two weeks instead of a full payment once each month. This helps you knock off several years of your loan.
Shorten Loan Time Frame
If you have a 30 – year loan consider doing a 15 – year instead. The payments will be higher, but your overall loan will be cheaper because you’ll pay less in interest.
Increase Number of Payments
What this means is that you will be making an extra payment every year, if you can afford it. It helps you save more money the following year.
Interest is calculated daily instead of monthly and because this money spends a lot of time in the account before you take it out, you save on interest expense. Many have said you need special software to do this but that is not true. The biggest problem with this method is discipline because people tend to not understand money management and spend their money on things less important.
Cut ONE habit and divert funds to your loan
We all have certain routines or habits that cost us money. A $4 latte twice a week, memberships we never use, and so on. For me, it’s those $.99 deals on books. I buy them because they’re on sale, yet meanwhile I have…wait for it…2,300 books sitting unread on my Kindle. The majority of them were freebies. Rather than grabbing deals on books that I’ll never read, I’ve decided I’m going to read what I have. Remember, even if you can add an extra $20 to your payment, you can knock time off your loan. Find a cheaper- or free- way of satisfying your coffee or book cravings, then divert those funds to your loan.
Your Next Move
Pay with cash or stick with a 15 – year fixed rate mortgage. Keep your monthly payment to no more than 25% of your paycheck.
Even if you follow just a few of these money hacks, you could save yourself a lot of money on your home loan in the long run! Think of what you could do with all that extra cash. Once your home is paid off, keep putting the money you spent on the mortgage away for your retirement to get even more bang for your buck.