Tips & Resources

Tips to Pay Down Your Mortgage Faster

Tips to Pay Down Your Mortgage Faster

Purchasing your first home – or even your fifth – can be an emotional time filled with excitement, elation, and dreams for the future. However, once you’ve settled in, made the house your home, and paid the initial mortgage installment, the idea of 30 years of payments might cause worry and distress. We’ve compiled top tips to pay down your mortgage faster and help alleviate concerns. Check with your mortgage company for payment guidelines or penalties before modifying your current process.

PAY MORE TO THE PRINCIPAL
Most mortgage payments are made up of principal, interest, taxes, and insurance. One easy way to make an impact on your mortgage is to pay an additional amount each month to the principal. Typically, you can select principal reduction as a one-time payment option once you have made your standard monthly payment. These extra principal payments result in an account that matures sooner, with less interest paid over the loan’s lifetime.

Paying even a small additional amount on your mortgage each month is beneficial. Use our Mortgage Acceleration calculator to see how soon you could pay off your mortgage as well as how much interest you could save over the life of the loan.

MAKE AN EXTRA PAYMENT

At least once a year, use any bonuses, raises, tax refunds, or other windfalls as an additional payment toward the principal. Please note that paying extra toward the principal will not reduce the following month’s payment or allow you to skip a payment.

PAY EVERY TWO WEEKS
Dividing your mortgage payment in half and submitting a payment every two weeks results in 26 payments per year, the equivalent of 13 months and an extra mortgage payment per year. Some mortgage companies do not accept or process partial, biweekly payments, so be sure to contact your lender to verify the viability of this option.

REFINANCE TO A SHORTER-TERM LOAN
If you have a longer-term home loan, consider refinancing to a 20-, 15-, or 10-year fixed-rate mortgage, which typically offer a lower interest rate. With a shorter-term mortgage, you’ll pay considerably less in interest. Use our Mortgage Refinancing calculator to help you determine whether you should explore this option.

The Bank of Elk River offers a wide variety or resources and services for all your personal banking needs, including home mortgage loans. We offer 30-year adjustable rate and 10-year fixed rate mortgages in-house, and work with a reputable lender for other first mortgage products, including but not limited to construction, conventional, and FHA loans. Contact a mortgage lender today with questions or for more information.

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Mortgage Mortgage Payment Pay Down Mortgage Principal Payment Refinance

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