If you are ready to take out a home loan and want to get the loan paid off as fast as possible, there are a few things you can do to reduce the amount of time you have the mortgage for. If you don't want to owe the bank for 30 years, and you want to get some equity into your investment, you want to consider doing things a bit differently than with a 30-year mortgage. Instead, you want to try to get approved to do these things.
Look at Bi-Monthly Payments or 15-Year Mortgages
If you can afford to do it, pay your mortgage twice a month or try to get a 15-year mortgage. The benefits of these options include the following:
- Pay less in interest over time
- Build equity in the home quickly
- Pay off the house sooner
For some it's easier to make two smaller payments a month, as opposed to one large payment, and doing this means you are paying off more each month. Talk with the mortgage officer to see if you could do either of these things instead of doing a traditional 30-year mortgage.
Set Up Automatic Payments
If you worry about paying the mortgage late or missing a payment, set up automatic payments. When you do this, the money will automatically come out on the day you choose. Ask your mortgage company whether they can pull the money out on a day that you get paid so you know the money they need will always be in there. You can also get a special mortgage account and you put your mortgage money directly in there.
Part of your paycheck can go directly into that mortgage account so the mortgage account is always full. You may also want to ask the mortgage company to take out a set amount that is rounded up from what you owe so you are always overpaying a little on the mortgage. Also, if there is money left over in the mortgage account each month, send a check to the mortgage company with the leftover money.
You can pay off a home loan quickly if you dedicate some money to the endeavor and budget properly. If you can't get approved for a 15-year mortgage right away, then pay your monthly mortgage on time and wait a couple of years to reapply, and then see whether you can have the mortgage changed. This way you can save later on in the future.
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