VIDEO: 6 ways to pay off your mortgage sooner

Bethany RamosFinance, Homeowners, Videos

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Reading Time: 2 minutes

Among homeowners, this is a question that comes up a lot. Most people want to know after buying a house, and rightly so, how long they can expect to be paying on it. You can meet with your lender to figure out the specifics of your financial situation, but there are a few things we know to be true about early home loan payoff.

Time to crunch the numbers. Use our Mortgage Payoff Calculator to find out if it’s a good idea for you.

To understand how mortgage payoff works, we must first define some lender jargon. As you pay on your mortgage, you may hear about a process called amortization, or payoff through a fixed repayment schedule on a loan.

As the Consumer Financial Protection Bureau explains, it works a little something like this:

  • When you first get your home loan, you’ll have a higher loan balance because you owe more interest at this time. Right now, most of your monthly mortgage payment will be going to pay off the interest with a small amount chipping away at the principal of the loan.
  • As time goes on, you’ll pay down the loan’s principal and owe less interest as your loan balance gets smaller. Right now, a larger amount of your monthly mortgage payment will go toward the principal of the loan.
  • Soon enough, you’ll get closer to the end of your loan and owe much less interest. Right now, most of your monthly mortgage payment will be used to pay off the loan principal.

No matter how long you’ve owned your home, you could benefit from watching this short video. We’ve come up with six helpful mortgage payoff tips that you can put into action to pay down your home loan, starting now. These tips aren’t at all complicated, but you can always contact your mortgage lender for more guidance. The best part? These tips make sense. And they can help pave the way to more financial freedom.

For educational purposes only. Please contact your qualified professional for specific guidance.

Sources are deemed reliable but not guaranteed.

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