I get asked all the time how can I pay off my home faster. Well, here are 3 ways to accomplish that.
1. Refinance into a shorter term mortgage
Dave Ramsey suggests a 10 yr mortgage. While this is a great way to be free and clear on your home in 10 years the issue is here is you have very little flexibility. When the payment is due at the beginning of the month and money may be a little tight you are contractually obligated to make that payment so it requires quite a bit of discipline
2. Make Extra Payments
So you have a 30 year mortgage and money left over at the end of the month. Go ahead and pay extra. The rule of thumb is if you make bi weekly payments which is half your mortgage payment every two weeks or if you send in one extra mortgage payment per year you’ll cut 5-6 years of your mortgage term
While you’ll be saving 10’s of thousands of dollars in interest with the two ways listed above The problem is once you pay extra to your mortgage you cannot get that money back unless you refinance or sell your property
Now here’s the best and fastest way to pay off your Mortgage…
3. Refinance your entire mortgage into a Home Equity Line of Credit
Let’s say you take out a $300,000 30 year fixed mortgage at 4.5%. The payment on this would be $1520. Now let’s take that same $300,000 but refinance it into a Home Equity Line of Credit and make the same exact payment of $1520 every month. Wouldn’t you know it the Home Equity Line of Credit would be paid off in 24 years making the same exact payment!
What we teach is don’t just make a payment to it. Treat it exactly like your checking account. Pay all of your bills from it and deposit all of your income into it. As long as you have more money coming in than going out you’re treating this just like a Savings account all while aggressively driving down the balance of your loan and having it paid off in full in 5-7 years.
It’s really that simple. Thanks for watching.