Most of us dream of the day of true financial freedom where all of our debts are paid and we can comfortably sail off into the sunset. If you’re one of the many who desire just that, then paying off your mortgage before your retirement is probably high on the list. Even if paying off your home seems insurmountable, there are some things you can do to expedite the process.
In this post, we’ll take a look at some of the tactics you can use to pay off your mortgage and retire mortgage-free.
1. Pay More Monthly
This may seem like a no-brainer, but putting a little extra towards your mortgage payment each month or making lump-sum payments annually makes a huge difference in how long it takes to pay off your house. Even a small dedicated monthly payment made directly to the principle balance of your mortgage can shave years off the term of your loan. A shorter-term means savings from months of additional interest payments and allow for you to pay off your mortgage, potentially, months or even years earlier than planned.
2. Lump-Sum Payments
Another tactic to paying down your mortgage sooner and retiring mortgage-free is to make lump-sum payments. Expecting a big bonus this year? Are you entitled to a tax return? If you expect significant financial windfalls annually, those funds can be applied in part or in whole to your mortgage. When it comes to income tax returns especially, you likely never noticed those funds being gone in the first place did you?
3. Make Safe Investments
If you’re in it for the long haul, make some safe investments that can be used to pay off your mortgage when it gets manageable. This tip is somewhat subjective depending on your financial strategy, but making safe investments in high-yielding mutual funds can A) give you an accessible rainy day fund and B) out-earn your mortgage in terms of annual return.
4. Live Simply
If you truly want to be mortgage-free at retirement, then consider living simply. Instead of focusing on world-building, put your focus into world-maintenance and valuing family time. This philosophy will keep the cost of living relatively low while increasing your overall quality of life. With that said, you can put your savings towards your monthly premiums, therefore, paying off your mortgage early!
If you and/or your spouse are empty-nesters, consider downsizing your home to something smaller and putting your current equity into a new line of credit. This move is a big one, but can lower your existing payments and allow you to structure a mortgage product in a way to pay down your smaller home quicker.
On the other hand, if you’re happy with the home you’ve got then consider refinancing your existing mortgage for lower interest rates or better terms altogether. Refinancing can be structured in a number of different ways, but the end result is to either lower your payments, lower the total amount of interest you’ll pay, or restructure the terms of your new loan. In the end, you’ll come out on top.
If you don’t know where to start with refinancing your home or seeking a new mortgage for downsizing, then get in touch with Tidewater Mortgage Services, Inc. With over 20 years of experience, we can help you find the right mortgage product to ensure that you’re mortgage-free for your retirement, and our short online mortgage application can have you pre-qualified the same day!