Even if you got a great deal on your real estate purchase, there are a lot of reasons to pay it off as quickly as you can. For starters, the more of your property you actually own, the more you stand to make if you go to sell later on. Paying off your property faster also means more money in your pocket for other things, including investments and property improvements.
Of course, not everyone has the cash on hand to simply pay off their entire land or home loan all at once. But with a few smart steps, you can put yourself on the path to a quicker pay-off and keep more money in your pocket for your other spending goals.
Interested in speeding up your own payments? Here are four ways to pay off your property more efficiently and in a shorter amount of time.
- Make an Extra Payment Every Quarter
Take a look at your current budget and financial goals and see if you have some money to put towards an extra quarterly payment on your property. Many lenders will allow you to allot this extra payment directly toward your principal, potentially leading to significantly more equity and less interest year after year.
- Opt for Shorter Terms
If you’ve financed your property through a traditional 30-year mortgage, it might be worth it to transfer to a 15-year mortgage and up your monthly payments in favor of long-term savings. Not only will you pay off your property faster, but you’ll also end up saving tens of thousands of dollars in interest over the course of your loan.
- Round Up Monthly Payments
Even a little bit of extra cash put toward your investment every month can make a major impact. So if you’ve got the wiggle room, why not round up your monthly payments and take a bigger chunk out of what’s owed? Even an extra $50 or $100 per month will add up, and like lump sum extra payments, could possibly be allocated directly toward principal payments.
- Look Into Mortgage Recasting
If you’ve recently gotten a big bonus or other sorts of financial windfall, you may want to consider mortgage recasting, which is where you put a large sum toward your mortgage and have your lender recalculate your payments based on the new amount owed. This can be preferable to a standard mortgage refinancing since there don’t tend to be heavy fees involved and is a smart way to re-amortize your balance for a quicker payout while also reducing the amount you owe in the first place.
Keep in mind that while paying off a property faster can be a good way to go, it’s not right for everybody. For example, if you need more cash on hand for emergencies or planned investments, or if there’s a risk that the value of your property might drop in the near future, then you might be better off sticking to your current payment plan. When in doubt, talk to a financial advisor to see what your best bet is in light of your short- and long-term goals, and remember that you can always adjust your payout strategy as needed.
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