Ready to tackle your mortgage and get it paid off in 7 years? First, let’s get a few things straight:
Ready to ditch your mortgage years ahead of schedule? It’s time to get strategic! These proven methods will show you exactly how to accelerate your payoff and achieve financial freedom faster. Let’s get into the tactics that can help you reach that 7-year goal — or even beat it!.
Paying off your mortgage early can save you thousands in interest and free up your income for other goals. If your goal is to pay off your 15 year mortgage in just 7 years it is possible with strategic planning and commitment. In this article, I’ll explain different methods to slash your mortgage term dramatically.
Start with a Reasonable Mortgage
When taking out a new 15 year mortgage, make sure to buy a home you can comfortably afford based on your income, expenses and goals. Getting a less expensive house with a smaller loan balance will make it easier to pay off faster. Run the numbers to see the monthly payment is 25% or less of your take-home pay.
Make Extra Principal Payments
The simplest way to pay off your mortgage faster is sending extra money toward the principal every month. Even an extra $100 per month makes a difference. For a $150,000 mortgage at 4% interest, paying $100 more monthly shortens the term by 3 years and saves over $13,000 in interest.
Sending extra to principal is more effective than just making one extra payment yearly because the interest savings compound monthly. Always specify the extra amount should go to principal only.
Increase Your Regular Payment
Another route is formally increasing your normal monthly mortgage payment. For example, you could change your payment from $1,000 to $1,500 monthly, with the extra $500 going to principal. This builds equity faster without having to manually make extra payments.
Make Biweekly Payments
Paying half your monthly mortgage every two weeks adds up to an extra full monthly payment yearly, since there are 52 weeks in a year. This equals 13 months of payments instead of 12, accelerating payoff.
Refinance to a Shorter Term
Refinancing your 15 year mortgage to a 10 or 12 year term keeps the same loan balance yet shortens the length. Your payment will increase but you’ll slash interest costs and years off the loan. Crunch the numbers to see if it fits your budget.
Use Windfalls Wisely
When you put extra money from tax refunds, bonuses, inheritances, or other sources directly toward your mortgage, it can make a big difference. Even an extra $1,000 can save you months of payments. Avoid spending windfalls so you can use them strategically.
Downsize Your Home
If you sell your big house and buy a smaller, cheaper one, you can quickly pay off your mortgage. You can use the equity you get from selling your home to buy a new one, and you might even get paid more than 10% in cash. You can pay off your old mortgage faster if you get a new one with a lower balance and payment.
Stick to a Tight Budget
To pay off your home in just 7 years, you’ll need to free up as much money as possible each month Building a strict monthly budget and cutting discretionary spending is crucial Pack your lunches, cancel unused subscriptions, reduce grocery and utility bills, and scale back fun money.
Avoid New Debt
It will be extremely difficult to pay off your mortgage early if you are constantly taking on new debt. Go on a spending freeze for everything except essentials. Drive your vehicles longer by maintaining them to avoid car loans. Say no to credit cards and personal loans that increase monthly obligations.
Turn Raises Into Extra Payments
When you get a raise at work, use the extra money to make extra mortgage payments. Don’t increase your lifestyle or spending when making more money. To stay on track, promotions and bonuses should also be given to the mortgage principal.
Make Sacrifices Now for Future Freedom
It takes discipline, commitment, and smart choices to pay off a 15-year mortgage in just 7 years. Give up things like driving an older car, taking fewer vacations, working extra jobs, and moving into a smaller home. But you’ll gain financial freedom in the long run!.
Crunch the Numbers
Use a mortgage payoff calculator to determine your target monthly payment to reach your 7 year goal. Get quotes from lenders to see payment amounts for different terms if refinancing. Create a detailed budget to find opportunities for cutting back discretionary expenses.
With strategic planning, consistently making extra payments and sticking to a tight budget, you can pay off your 15 year mortgage years earlier. The freedom of owning your home free and clear makes the sacrifices worthwhile!
Bi-Weekly Payments to Pay Off Your Mortgage in 7 Years
Want to know how to pay off your mortgage in 7 years? Try bi-weekly payments. Instead of one big monthly payment, split it in two. You’ll pay half every two weeks. That’s 26 half-payments a year — like making 13 full payments! Perfect if you get paid bi-weekly. Think of it as adding an extra month’s payment each year without feeling the pinch as much.
Refinance to a Shorter Term
If you’re serious about paying off a mortgage in 7 years, consider refinancing. Switch from a 30-year mortgage to a 15-year mortgage. Yes, your monthly payments jump, but you’ll slash years off your loan and save big on interest. This is a powerful move, but make sure your budget can handle the higher payments.
How To Pay Off a Mortgage
FAQ
How to pay off a 15 year mortgage in 7 years?
Strategies for Early Mortgage RepaymentBi-Weekly Payments to Pay Off Your Mortgage in 7 Years. Refinance to a Shorter Term. Lump-Sum Payments and Hitting the Principal Hard. Round Up Payments with Small Change for Big Savings. Cut Costs and Boost Income to Fuel Your 7-Year Mortgage Payoff.
What happens if I pay 3 extra mortgage payments a year?
Making three extra mortgage payments per year can significantly reduce the total interest paid and shorten the loan term. This is because each extra payment reduces the principal balance, leading to less interest accruing over time.
What is the 2% rule for mortgage payoff?
If you want to pay off your mortgage quickly, the 20%222% rule says to try to get a new interest rate that is 2% lower than your current rate. This helps ensure that the savings generated by refinancing outweigh the costs associated with it.
What happens if I pay an extra $1,000 a month on my mortgage?
Making an extra payment on your mortgage can help you pay off your mortgage early. It also helps reduce the principal balance quicker which means there is less principal to gain interest. In the long run, your extra payments could help you save money as well as reducing the length of your loan term.