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How To Shorten Your 30-Year Mortgage

MortgageIf you’ve recently bought a new home, chances are you’re staring a 30-year loan in the face, which is a really long time to be tied to a debt. If you want to shorten the amount of time that you have to deal with the mortgage company, here are some suggestions.

Send a Bit More
Whenever you are able, preferably every month, send the mortgage company a bit extra as a principal payment. To do this properly, you’ll need to send in your regular mortgage payment amount due by your usual method. Look on your mortgage information for notes on sending in paperwork or principal payments. The mortgage company may want them sent to a different address or handled differently.

Send in a check for the extra amount of principal. The memo field should have your account number and “principal payment” noted. Include a separate piece of paper with your name, address, phone number, account number and a notation about paying on the principal of the loan.

If you just send both payments as one lump sum, it’s possible that your funds won’t be credited properly and the principal will not shrink at all. Of course you always want to make your payments early or on time each month to avoid eviction after foreclosure or other repercussions.

Make 13 Payments A Year
If you have a 30-year loan and can manage to make 13 mortgage payments per year, every year, your house will be paid for approximately 5 years early. There are a couple of ways to squeeze in an extra payment.

You can make 1/12 of a mortgage payment extra each month. If your home mortgage payment is $1200 per month, you pay $100 extra each month as principal for the duration of the loan.

According to, making your mortgage payments bi-weekly is definitely a good idea. However, if your mortgage company plans to charge you extra for this feature, don’t do it. It’s just as easy for you to “pay” your savings account every two weeks and make your monthly payments from that, as well as lump sum principal payments whenever you wish.

Refinance to a Shorter Term Mortgage
Possibly you’ve already thought about refinancing your 30-year home loan. Maybe you’ve already done it once or twice in the past. It’s hard to pass up those great interest rates and much lower monthly mortgage payments

Have you ever considered getting a 15-year mortgage or a 20-year mortgage instead? It’s true that with a shorter term mortgage, your new payments won’t be as low as with a 30-year mortgage but the number of years you’ll cut off your debt is unbelievable! Think about where you’ll be in 15 or 20 years. Will you need the money for the kids’ college? Or your retirement? With recent interest rates, you may be able to get a 15-year home loan and still lower your monthly payments. It’s certainly worth investigating.


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