Shift into hurry-up mode on your mortgage payback
Every extra dollar you pay reduces the principal of your loan, the total interest you’ll pay, and the length of your loan.
Sign up for the biweekly plan. Divide your monthly mortgage payment in half and pay that amount every two weeks. By following a weekly schedule instead of a monthly one, you end up making the equivalent of 13 monthly payments in a year. Check with your lender before you try this. Some won’t accept half payments, and some charge a fee to process biweekly payments.
Make accelerated payments on your schedule. Anytime you can send a little something extra to your lender, do so.
Pay down your principal monthly. Talk to your lender about sending extra money every month that will go straight to paying back the loan principal. This will greatly reduce the amount of interest you’ll pay long-term.
Send in a lump sum. When you have some extra cash, ask your lender to apply it all to your loan principal.
Refinance. Do this only at a lower interest rate and a shorter loan term — but continue paying at least the same monthly amount as you did before.
You’ll find more great tips on paying down your mortgage starting on page 282 of What Every Senior Should Know: 1,267 Secrets to Living Well on a Fixed Income.
- Dena Garner