Pay Off Your Home Faster
Of all the benefits to refinancing your home, paying off your mortgage in less time is the biggest. Reducing the term of your loan by refinancing can not only shave years of payments. It can save you tens of thousands of dollars in the process over the life of your loan.
Because paying off your home earlier reduces the overall amount of interest you’ll pay, it could let you to retire earlier, travel more, or put extra cash in your pocket. You’ll increase your home’s equity faster. You’ll not only own your home in less time, but you’ll pay much less to own it. Talk to one an Ark Mortgage Advisor to see how you could benefit from refinancing your home to shorten your term.
How much can I save by reducing my loan term?
Choose your rate and term and calculate your potential new monthly mortgage payment in seconds. You might be surprised at how affordable it is to own your home,,, and in a lot less time than you thought. See how much interest you’ll pay over the life of the loan, and experiment with prepayment amounts to calculate their impact on your mortgage.
Term Reduction Refinance FAQs
There are four simple ways that you can pay your mortgage off faster.
- Make biweekly payments – Rather than making one monthly payment, you can make half the payment every two weeks. If your mortgage payment is $2,000 a month, you would pay $1,000 every other week. Because there are 52 weeks in a year, a biweekly payment schedule will result in the equivalent of 13 full monthly payments per year. The extra payment that you’d be making each year can help you pay your mortgage off 5 years sooner and eliminate 5 years of interest as well.
- Make extra principal payments – Most mortgage lenders allow you to make an extra payment every month and mark it “principal only”. This payment will go directly to pay down the principal (the house itself), rather than both the principal and interest.
- Refinance into a shorter-term loan – If you currently have a 30-year mortgage, refinancing it as a 15-year loan will help you pay it off in half the time, potentially at a lower interest rate as well.
- Put unexpected money you receive into your mortgage payments – If you put the proceeds of tax refunds and annual bonuses towards the principal of the loan, you’d be pleasantly surprised at how quickly you can pay off your mortgage.
There are two key benefits to a 15-year mortgage versus a 30-year mortgage. A 15-year mortgage carries a lower interest rate, which means that the overall interest you’ll pay on the principal balance of the mortgage is lower. The second benefit is that you’ll pay off your mortgage in half the time. By paying interest for only half the amount of time, you’ll end up paying significantly less interest overall.
- Pay While You’ve Got the Money – Your monthly mortgage payment probably represents a significant percentage of your income. But at retirement, most people’s income drops by up to 66%. Eliminating your mortgage payments before retirement can translate into less financial stress later on.
- Interest Savings – The shorter your term, with most programs, the less interest you’ll pay overall.
- Peace of mind – Some people just want to be debt-free as early as possible.Speak to a Mortgage Advisor to discuss your personal goals and needs.
With this handy calculator, you can gauge your potential new monthly mortgage payment in seconds, and ensure you’ll have enough money left to cover the rest of your living expenses. Choose your rate and term—you might be surprised to see how affordable it is to own your home sooner than you thought possible. Note how much interest you’ll pay over the life of the loan, and then enter prepayment amounts to calculate their impact on your overall expenditure.