Use one of these options to lower the interest you pay on your mortgage.
How do you hack your mortgage? There are three ways you can do this:
1. Make one extra mortgage payment per year. What does making 13 payments a year do? With that last payment going toward the principal, it turns your 30-year note into a 24-year note. That’s less interest for you over the life of your loan. Even if you don’t plan to stay that long, it helps build your equity faster. You could even take this further by making an extra payment per quarter, turning your mortgage into a 19-year note.
“Review your notes annually to see if there are options or opportunities for you.”
2. Make bi-weekly payments. That means you’ll make 26 half-payments each year. That’s not an extra payment or a larger payment, you’re just spreading the payments out, turning a 30-year note into a 25.6-year note and cutting years of interest off.
3. Get a 15-year note. This is especially useful if you are getting into the market now or you’re looking to refinance. A 30-year fixed-rate mortgage is hovering around 6.5% right now, meaning that on a $300,000 loan, you are paying $382,000 in interest. In comparison, with the same loan amount and a 15-year note, you’d only be paying $170,438 in interest. However, the payments will be higher.
Also, you can consider this a bonus hack: Review your notes annually to see if there are options or opportunities for you. If you need any help with this, reach out to your lender or us and we’ll go over your notes to help you find the best option. You can contact us by phone or email and we’d be happy to help you.