“When you get in debt you become a slave.” -Andrew Jackson
Are you thinking about how to pay off your mortgage in 5 to 7 years? Do you plan to create a solid and full-proof plan to get rid of your mortgage debt? A debt of any kind is stressful. However, with a mortgage loan, you can surely sense. The tension of losing your home for not being able to pay your mortgage. The financial crisis, loss of job, lack of savings, or limitations of earning can be specific life incidents that may fall on you at any time.
Hence, it’s important to never rely on future assumptions of being able to pay off your mortgage. Although mortgage loans being of high perceived value or amount can be hard to pay back instantly or in a short period, having a long-term plan is ideal to pay off the debt slowly but steadily is the only way you can say goodbye to the stress-increasing sword of residential insecurity and high-interest rates draining your financial balance too.
The good thing is exactly that when it comes to paying off mortgages. Don’t get it? We’re talking about the amount of time you get to pay back the loan amount with interest. Usually, with this loan payback duration being of a prolonged period of time, i.e., a decent amount of years in which you can slowly and surely pay back the debt, it’s not as endangering as you think it is.
So what do you do at a time like this? Let go of all the worries and relax until the deadline for the mortgage payment is standing right at your doorstep? Well, that might be an escape plan since there is enough time for you to slowly pay back the amount, but it’s certainly not an intelligent step. Especially when you lose ownership of your property to attain this loan, the sooner you pay off the mortgage, the better it will be for you to achieve and maintain residential security for your present and future.
So what’s keeping you from creating a power pack plan and paying back the loan in 5-7 years instead of 30? If you’re not sure where to start on paying off your mortgage in 5 to 7 years, then we’ve got a detailed guide for you to finalize and practice a full-proof plan below. So without further ado, let’s learn the steps to faster loan payoffs.
Paying Off Your Mortgage in Less Time.
Other than the stress of losing your financial security, what is more to the risks of a prolonged mortgage? Can you guess? Yes, it’s the interest amount that keeps on draining your finances and overall savings. If you’ve had a mortgage loan in the past or going through the struggle of paying it back in the present, then you would certainly understand the stressful procedure that this prolonged loan enforces, i.e., consumption of hundreds and thousands of dollars as interest payments.
With that being said, the only reliable way to get out of this situation is to pay for the mortgage as soon as you can The less time you take to pay off the mortgage, the less monthly or yearly interest payment you will have to give to the loan lender. Now when we speak about paying off mortgage fast, what comes to your mind?
Do you plan to get another loan to pay back this mortgage in a single installment or a few divided ones? While that is an instant way to get rid of the mortgage payment, certainly not wise to have another debt in your name. Besides, as the above quote suggests, having any kind of debt is equal to slavery, as you lose the freedom to save, invest, or even waste your finances. Instead, being under debt enforces the need to pay a certain amount to the loan lender every month – making your financial choices restricted and limited.
But worry not, as there’s still a smart way to pay off this debt in 5-7 years. Yes, that’s right – having an effective strategy and following the strategic plan is always the answer to gaining consistent progress in any task. Keeping that in mind, here’s a step-by-step strategic plan you can follow in this debt-paying struggle of yours.
Have an understanding of your Mortgage.
Depending on the type of mortgage you have, i.e., fixed mortgage or adjustable-rate mortgage, you face different payment ease every month. Usually, these loans let you have the ease of paying less money in the early years while slowly leading toward expanded and principle payments for regular payment of the mortgage loan. Since there’s evident participation of the bank in a mortgage loan, the early payment process is delivered to the bank, which helps this financially legal sector ensure that its fair share is paid off during the early process. Afterward, you may end up having to pay larger and substantial amounts with growing interest charges, as per the loan lender’s legal requirements or a finalized interest rate flow during the legal procedure.
Calculate the Dividend Payments.
To be able to effectively and strategically understand how to pay off your mortgage in 5 to 7 years, it’s essential to understand the numbers that indicate the payment and interest every connected source is receiving from you. For this, you can use a mortgage payoff calculator to factorize the amount that you pay or may begin to pay in the future as a principal every month.
Understanding the number and dividing them by the years you have to pay off the debt can make it easier to calculate each of the steps you take towards paying off the mortgage. However, if you are in the middle of the loan payoff, then you can factorize the dollar amount as per the years you have left to pay off the mortgage. Once you understand the number of dollars you need to pay, the time you have to pay them, and how much should be added to this amount that you pay every month, it can be easier to evaluate a final time when you will be out of the mortgage payment stress.
Don’t Forget to Re-Evaluate the Reality.
Now start thinking that you need to pay a $756,000 mortgage in 13 years while you pay $5,000 every month, including the interest rate. Here, if you choose to pay $10,000 every month and complete the whole loan payment in 6.3 years with an annual payoff of $120,000 – it may seem like an unrealistic goal that you can only achieve if you expand your income sources. But how do you increase your income in a few months? It’s like a genie is waiting for you to rub his lamp so that it can make you rich instantly, right?
Therefore, while you’re creating a starting mortgage payoff plan to understand how to pay off your mortgage in 5 to 7 years, make sure you remain realistic during the goal and/or target-setting process. The ideal way is to look for areas or sources where you pay down the loan principal. This includes applying for the tax refunds in the principal balance or reconsidering all your household costs and loan rate to find specific areas of expenses where you can save.
Either way, when you find one or more sources to cut down little investment from your monthly finance and put down for the principal amount, you can apply the savings attained this way into the principal. Now, this may seem like a slow and non-helping process to pay off your loan in 7 years, but it is undoubtedly an intelligent way to passively lower the principal amount while you pay the interest rate every month.
Using the Equity to Pay Down.
Last but not least, if you have enough equity that you can use to obtain an equity line of credit, then this is another effective way to pay off your mortgage in less time. What you have to do is simply focus on intelligent debt management while you temporarily increase the overall debt using the HELOC. With this HELOC working on scenarios where the mortgage is on compound/simple interest, allowing you to afford this costly approach.
In simpler terms, adding a certain amount in HELOC even at higher interest rates would give you a decent monthly payment. Now, if you use this certain amount that is easily generated every month to first pay off the principal and then the equity line, you can pay off the mortgage in a faster way. In this way, investing a certain amount in HELOC at an interest rate and using this amount of yours to pay down the mortgage can be a realistic plan of handling and expanding your budgeting, helping you take limited years to pay off the entire debt.
For best awareness, it’s better to consult a loan counselor to understand the approaches and benefits of this process. If this works for you, it can be a benefitting strategy to pay off your mortgage in the desired timespan you set for yourself!
What is Involved in the Mortgage Payment?
Before you go for a mortgage payment and start paying your loan every month, you must know how that payment is divided. Besides, it’s not all just the lender’s payment; there are a lot more portions. It includes:
- Principal payment – the borrowed amount that you will payback.
- Interest Payment – the amount charged by a lender for giving you the money.
- Tax Amount – the property tax that you have to pay according to the value of the home you buy through mortgage payment.
- Insurance Payments – being a homeowner means the need to have home insurance too. Therefore, your closing costs may also include a premium amount for your home’s first-year insurance.
Now that you’re all set and aware of the detailed process and methods to get rid of the mortgage payment in lesser time. It’s time you start this endeavor and bring back the residential and financial security needed for a better present and future.
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