Depending on the type of mortgage loan, most homeowners buy their houses knowing that it could take up to 30 years to pay off the debt. While a job relocation or other financial scenario can alter this time-frame, monthly payments will be the norm. However, if you want to reduce the financial burden, there are ways to pay down the mortgage early. Here are several to consider.

How to Pay Off a Mortgage Early

1. Pay Down the Principal

Your mortgage loan payments may only be chipping away at the interest you owe—not the actual amount to pay down the balance. If you can, pay more each month to lower the principal amount. This will help you pay the balance faster and save you money on interest. You can also pay more each quarter to finish the mortgage in half the time. 

2. Make Bi-Weekly Payments

Instead of making one loan payment each month, split what’s due into two equal payments. For example, if your mortgage is $1,500, you’ll pay $750 every two weeks. Each year, you’ll be paying off an extra month, shaving years off the process. Finally, you’ll save a significant amount of interest on the balance. 

3. Refinance the Loan

You can save by refinancing with a shorter-term loan. If you have a 30-year mortgage and refinance into a 15-year option, you’ll eat away at the balance at a much faster pace. By doing this, you may also get a lower interest rate as long as your credit history is strong. Keep in mind, a shorter mortgage loan term will mean higher monthly payments. 

4. Use Tax Refunds & Bonuses

Consider using a tax refund or work bonus toward your mortgage payments. If you get a large inheritance or insurance payment, either of these may also help pay down your loan earlier. Depending on the amount of these additional income sources, they can make a sizeable dent in what’s owed. However, if you’re in credit card debt, pay that off first to prevent losing money due to high-interest rates. 

If you want to pay down your mortgage loan early, North Jersey Federal Credit Union will help make it happen. Based in Passaic County, NJ, this financial institution offers refinancing and low-interest rates to accommodate every situation. Whether you’re a millennial or undocumented immigrant, their mortgage team will gladly discuss customized strategies. To learn more, call (973) 785-9200. Check out the website for details on available loans.