When you buy your first home and you see that 30 year term, it seems like you’ll be paying for your home forever. However, there are ways to shorten your mortgage term without refinancing or paying extra penalties.

  • Pay a little extra money every month towards your principal. You can usually add a dollar amount that specifically goes towards that and even if you can only afford $20.00, send it in. That is an extra $240.00 towards your principal each year.
  • Make one extra full payment a year. By doing this simple thing, you can reduce your loan term by years.
  • Don’t spend money on too many frivolities. If you have extra cash on hand, invest it in your equity or in home improvements – especially the kitchen and bathrooms which will increase your home’s value.

No matter which mortgage you choose, make sure you ask about prepayment. If you want to refinance down the road, you don’t want the obstacle of a prepayment penalty to get in your way. Prepayment penalties are not the norm – they are usually associated with higher risk loans with higher interest rates. Basically, if you decide to pay off the loan, they will demand an amount of money as a penalty. This can be a fixed amount or a percentage of your loan. No matter which program your mortgage broker or mortgage website is suggesting, ask about prepayment penalties before you sign. This can mean thousands of dollars in savings down the line.

Related posts:

  1. Negotiating An Early Home Buying Settlement Date
  2. Making Mortgage Prepayments Work
  3. Buying Luxury Homes In Maryland While Not Paying Luxury Prices
  4. Should You Prepay Your Mortgage?
  5. Get the Best Mortgage by Knowing the Worst Mortgage