Working to shorten the total time until your mortgage is paid? According to Trulia.com, making one extra mortgage payment a year can save years of payments down the road. For example, if you’re paying back a $150,000 mortgage with a 4-percent interest rate, you can expect to pay off your mortgage by January 2047 when following a standard 30-year payment schedule. If you were to contribute one additional $716 payment annually, however, you could expect to pay off your mortgage in January 2043. Here, some tips on how to reach this achievable goal.
Review your current budget
Examine your monthly credit statements, savings, debt and overall spending to get a better understanding of your financial situation. Knowing your financials gives you a grasp of your spending and saving habits, which in turn offers insight into how you can alter those habits to contribute more to your mortgage.
Set a reasonable goal
Keep on track with your savings plan by setting a goal you know you can achieve. For instance, if you know you can save $10 a month, start there. Put that extra $10 into your mortgage payment for one month. Once you’ve reached that goal for a few months, bump it up to $20 and then increase the amount incrementally.
Automate extra savings
There always will be a reason to divert extra savings to another area (such as holiday spending, home repairs or car payments). To help you avoid the temptation of funneling funds elsewhere, automate extra savings into your mortgage payment. Use your bank to automatically portion a sum from your paycheck directly into a savings plan.
Check in regularly with your finances
Even after you’ve boosted your payment, it’s still important to continue evaluating your success. Set a regular “money date” to check in with your numbers. Schedule a weekly lunch devoted to your finances—anything that can keep you in touch with your long-term financial goals and help you stay the course.