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Know How To Pay Down Your Mortgage In 12 Months

Mortgage payments are one of the heftiest recurring expenditures that one makes during their lifetime. According to LendingTree, around 10 million Americans aged 65 are still paying their mortgage payments.

Average stands at $1,100

The U.S. Census Bureau puts the average mortgage amount an American pay at $1,100. Thus, instead of paying huge sums over your lifetime, it is much more economical to aim to pay your mortgage as soon as possible.

Here’s how you can pay your mortgage in 12 months.

Read More: 7 tips to best use your social security checks

Getting in the mental state

The upcoming year that you decide to pay off your mortgage, is going to be full of sacrifices. You won’t be eating out or purchasing a ticket to your favorite game. So, do it in the month before you began to execute your payoff plan and get in the mental state to not do it for 12 whole months.

Manage monthly budget

Your ability to pay down your mortgage will be immensely affected by your ability to limit your expenditures to the most essential ones. So you need to start managing your monthly finances better. If you split your income in half for necessities and savings, around 50% should be left to you for your mortgage.

Work overtime

Working overtime is one of the easiest ways to earn an additional income according to Steffa Mantilla of Money Tamer. Other options include working on freelancing projects or getting a part-time second job. We never said paying off the mortgage in 12 months was going to be easy.

Bi-weekly payments

Make your payments bi-weekly rather than monthly. This helps you decrease the overall monthly interest that you pay on your mortgage and can vastly decrease the amount of time you need to pay back.

Make a lump-sum payment

If you have some accumulated wealth or your tax return has just come in, we suggest you try paying off a huge chunk by making a lump-sum payment. This will drastically reduce the time and amount you need to pay down the mortgage.

Adjust for inflation

Take note of the inflation in your country and your finances. Because in an inflationary scenario, while the mortgage payment remains the same, the value of money you pay is going to be less. So, you might lose money by paying extra every month. Further calculations are needed to make this decision though.

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