If fortunate enough to have some money to spare, would you consider putting it toward your mortgage? The thought of being debt-free should be quite enticing. After all, paying off your mortgage ahead of schedule can save you thousands of dollars in interest. But if you know anyone who has been down this road, they will probably tell you to carefully weigh all your options before deciding on a strategy.

It’s especially important to be mindful of potential pitfalls that come with different strategies. However, most financial advisors agree that if you have outstanding debts such as student loans, you should rid yourself of those before paying your mortgage down. In addition, you should always build room for unexpected expenses into your budget.

Another crucial point to consider is whether the interest you would gain by putting extra money toward retirement could outweigh the interest savings you net from paying off your mortgage early. Once you figure that out, be sure to ask your lender about any existing prepayment penalties. Note that this clause is usually specified in the mortgage contract.

With all that said, check out the following four strategies for paying off your mortgage sooner!

Funnel “Bonus” Money to Loan Principal

If you are due a Christmas bonus, tax refunds or any windfall, putting that extra cash toward your loan principal will knock a few years off your mortgage.

Pay More Than The Monthly Minimum

By adding a little extra to each monthly mortgage payment, you could save thousands of dollars in interest over the life of your loan. Make sure to let your lender know you want the surplus applied toward your principal. Otherwise, that money may go toward the next month’s interest payment.

Refinance to a Shorter-Term Loan

Refinancing from a 30-year mortgage to a 15-year loan allows you to pay down your mortgage faster. If interest rates have fallen since you closed on your home, a shorter term coupled with lower interest rates will help you save money over the long haul.

Use an Amortization Schedule

A shorter-term loan will invariably result in higher monthly payments. That can prove risky if your monthly budget has little wiggle room. However, mapping out a clear plan to pay off your mortgage within a shorter timeframe can help.

Interested in moving to Fort Lauderdale or the surrounding area? Fairway Fort Lauderdale is here to help you! Call us today to schedule an appointment where we can discuss your finances and determine the best home loan program for you. Schedule an appointment today!