The federal tax rebate was a big benefit to a lot of families who used it to pay down debt, buy much needed but unaffordable items, or just put it away for a rainy day. If you still haven’t decided what to do with this refund, or any other windfall you may get, such as a bonus, think about the advantages of prepaying your mortgage.
Using extra funds you have will pay your home loan down faster.
This is one of the best ways you can think of to invest in your future, even if you have been thinking about investing in stocks. Especially since there is not a lot of confidence in the stock market nowadays, this is even more reason to put your money in something you get a lot of value from anyway, your home.
Prepaying part of your mortgage may help you to meet retirement goals ahead of time, since you can lessen the maturity date of your mortgage by cutting away at the interest payments, which form a great part of your mortgage repayment.
If you have already spent the refund, there are some other ways you can help to pay your mortgage down more quickly. You may not even have to change your everyday spending habits to any great amount.
Just cut out some small luxury, such as your gourmet coffee every morning, and devote the savings to an additional payment on the loan. Since interest piles up on interest in a mortgage, doing this reduces the total owed. You will merely be paying your loan off earlier.
There is another great way to pay your home loan more quickly is to pay it more frequently. What you can do is simply divide your payment in two, and send the first half in two weeks early and the second half on the normal payment date. You do not increase the payment, but the extra payment lowers the interest a little bit sooner each month.
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