4 Ways to Pay Off Your Home Faster in Today’s High-Cost Economy

Americans are feeling the pain of the rising prices at the gas pump and the grocery store and buying everyday essentials.  They are going out for fast food, which has risen astronomically by 78%, putting off home repairs and foregoing much-needed vacations to deal with all the stress of today’s economy.  Homeowners must deal with all this and skyrocketing property taxes due to the 34% real estate appreciation from the COVID period and spiraling homeowner’s insurance premiums.  These costs easily add another $300 – $600 to the monthly mortgage payment, burying homeowners.  One solution to all these rising costs is to pay off your mortgage as quickly as possible.

Irina Saveliev, the Founder of Paidoff™,  evaluates the 4 Ways to pay off your mortgage faster.

 

1. Make Extra Payments. This requires homeowners to identify and cut expenses out of their budget to free up money to apply for their mortgage.   This is easier said than done since many people live paycheck to paycheck.  Additionally, when homeowners make an extra payment, they are still obligated to make their required monthly payment.  So, only make an extra payment when you know that you will not need that money for an unexpected expense and have an emergency fund.   A word of caution: whenever you make an extra payment, please ensure that you state that it is to go to the   Otherwise, the bank may apply it to the interest, which benefits them, and your loan balance doesn’t decrease.  I have heard horror stories of this happening to include my stepdad.

 

2. Make Bi-Weekly Mortgage Payments.  This requires the homeowner to pay half the mortgage every two weeks instead of the usual once-a-month payment. Since there are 26 two-week periods, this only adds one extra monthly payment.  You will have made 13 instead of 12 monthly payments.   It reduces interest costs because the principal loan balance is reduced when payment is received instead of being held until the entire monthly payment is due.  The payoff results and interest savings are minimal because the lender charges compound interest which keeps the loan balance higher.  Finally, the lender may not offer the Bi-Weekly Payment option or may charge an additional fee for this service, negating some of the savings.

 

3. Refinance to Shorter Term Loan. Most homeowners choose a 30-year fixed mortgage because of the low payment.   The longer the term, the lower the payment.  Grant Cardone, a real estate mogul, recently said, “The savior of America will not be lower prices; it will be longer mortgages.  In your lifetime, you will see mortgages go from 30 to 40, 50, and maybe even 60 years. You could, if you live long enough, see a 100-year mortgage in America.”   Now, with a shorter term, like a 15 or 20 mortgage, the rate may be lower, but the payment is much higher.  If you can afford the higher payment, you will pay off your mortgage faster and save interest costs.  Before choosing this option, make sure that you can afford the higher payment, have an emergency fund, and consider the refinancing costs because it usually takes 3-4 years to break even and recover these added costs.

 

4. Refinance to a 30-Year First Position Home Equity Line of Credit. This product, Paidoff™, combines the homeowner’s checking account with their mortgage and a line of credit. They work seamlessly together 24/7 and are effective regardless of how the economy is doing. Irina—The Mortgage Breaker states that this is the best home loan in America because it eliminates all the negative features of traditional mortgages.  It is the most efficient loan to pay off your home.  Irina paid off my home in 5 years, so she knows first-hand how it works.  She created The Much Faster Formula©, which breaks it down in simple, understandable terms.  The three pillars of the formula are:  your payments go to Principal First, Not Interest; you only pay Simple Interest, Not Compound Interest; and you can make Unlimited Payments without being limited by the bank. Additionally, the 7 Gifts of Paidoff™ resolves all the shortcomings of the above options of paying your home off faster.