• Val Golyk

Three Ways to Pay Off Mortgage

According to statistics, more than 63% of homeowners, or 48 million people, have mortgages. With a total outstanding 1st quarter of 2019 mortgage debt of $10.4 trillion nationwide, this is the biggest threat to the housing market since the 2008 housing crisis and the snowball keeps growing. There are a number of reasons for that to happen:

The first is quite obvious, families love living in the property they own. However the housing price bar is set really high in some states and homebuyers depend on mortgages more than on their own savings.

The second reason is the willingness to invest in future equity by purchasing a property instead of renting one and investing in the stock market. In 1st quarter of 2019, the total household equity individuals owned was $26.1 trillion. If we withdraw the total mortgage debt of $10.4 trillion, we will have $15.7 trillion in household equity nationwide and that number is the biggest that America has ever had. To become homeowners without the burden of mortgage debt, Americans have a few options to choose from. We’ve picked the following three.

Method one: find a better job.

It may seem too obvious or too difficult to do but it really is the best way to pay your outstanding debt faster. If you look through articles about job seeking and salary increase you will soon find out that the only way to get a huge increase in your paycheck is to find another job instead of waiting for a promotion with your current employer. In addition if you have spare money to spend why don’t you use it towards mortgage repayment. Using a sample mortgage calculator with as low as $1,000 paid every month additionally you will save 8 years and 3 months of your life on a 30-year 1Mil mortgage.

Method two:  Refinance into a shorter-term loan.

Sometimes it is an option to change your 30-year mortgage to a 15-year. Of course, on the con-side, you will get a substantially increased monthly payment, but hey, we are talking about early mortgage pay-off here and you will have to sacrifice some of the leisure things you are used to. Usually, with a shorter-term mortgage, you will get a lower interest rate which basically means you will pay less to the bank and more to the principal of your mortgage. You can always use a mortgage calculator to play with the numbers and see how much money you can save shortening your loan term. If you feel like paying monthly with a 15-year term mortgage is a little too much for your current budget you can always think about a 20-year term this will, of course, increase your interest rate and the amount of money paid to the bank but will lower your monthly payment drastically so you may think of this as a compromise between 15 and 30-year mortgages.

Method three:  Use loan-assist software.

There is plenty of software on the market that aims to help customers repay their debt earlier. Some of those are “roundup” applications that use the difference in change between a single purchase and the next dollar and put that amount towards your outstanding debt every time you make a purchase, i.e. you purchase a donut for $1.57, the roundup would be $2-$1.57=$0.43. Cents and are typical representatives of such apps. Also, while they prove to be quite useful they don’t make a huge impact on your 1,000,000 mortgage debt. If you are truly willing to pay your debt off in advance without changing your job or changing to a shorter term loan – you should consider so-called financial literacy apps, such as Joy or Maiven. The last one is a fresh-new startup that claims to really improve debt-owners lives by suggesting correct spending categories that customer might want to sacrifice for the debt repayment sake. Also, it introduces a unique method to teach savvy spending habits to the customer that will help in achieving a debt-free life. They provide access to the private-release to selected users so you can sign up on their page.

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