The quicker you pay off your mortgage, the less interest you ultimately pay. That’s why many homeowners in Maryland look for methods of paying down their debt faster, which can be a bit difficult for people living on a budget. Taking the right steps can help you get a handle on mortgage debt, as explained by Bankrate.
Increase monthly payments
While making the minimum payment is important to stay current on your mortgage, you can also apply a little more money to cut back on the principle. A portion of your monthly mortgage payment is put towards the interest, and when you pay only the minimum less of your money goes towards the principle. If you plan on increasing payments, be sure to speak with your lender first. You want verification that the extra money will be put towards the principle, otherwise it may be applied to the interest.
Use your tax refund
If you receive a hefty tax refund each year, consider putting it toward your mortgage. You can also use other large influxes of money, like lottery winnings, inheritances, or work bonuses. Lump sum payments are great for saving money on interest, and can also help you settle your loan faster than you would normally.
Refinance your loan
Refinancing your loan can help bring down interest payments quite a bit. For instance, many loans with shorter terms also have lower interest payments. That means you’ll be able to pay off your loan at a much faster pace while also spending less money in the process. However, be aware that refinancing to a shorter term will mean higher monthly payments. Make sure your budget can handle the increase before taking steps to change your loan.