Unless you paid cash for your San Antonio home, you're making mortgage payments each and every month. By continuing on that path, it will take as much as 30 years and hundreds of thousands of dollars in interest to pay it off. If you recently purchased your piece of Stone Oak Living for $350,000 at 5.01% (30-year fixed interest rate as of October 17, 2018), you'll have paid over $327,000 in interest alone by the end of 30 years. That's almost as much as the principal! But you don't have to wait the entire length of the loan to pay it off. Learn about three different ways you can pay off your San Antonio mortgage early.
How to Pay Off Your San Antonio Mortgage Early
Refinance to a Shorter Term
The best way to pay off your San Antonio mortgage early would be to refinance to a shorter term. Switch that 30-year loan to a 15-year loan. Sure, you pay more ($2658 per month instead of $1881), but you also pay a lot less in interest ($128,000 over the life of the loan instead of $327,000). And you pay it off in half the time! The numbers arrived at here were based on a 5.01% interest rate for a 30-year fixed rate and 4.39% interest rate for a 15-year $350,000. The actual amount you save depends on your loan amount as well as your credit score. This works great if you purchased your San Antonio home with a high-interest loan. However, it might not be the best idea if you've lived there for a while and built up some equity. Talk to your lender to see if refinancing is the way to go for you.
If refinancing doesn't work for you at this time, consider setting up bi-weekly payments instead. Divide your monthly mortgage payment in half. Then, pay that amount every other week. At that rate, you end up making 13 payments per calendar year instead of 12. That cuts off as much as five years from the life of your loan. It also saves you tens of thousands of dollars in interest payments. Check with your lender first to see whether or not they charge a fee to accept bi-weekly payments. If they do, it may not be worth it to switch to this method to pay off your San Antonio mortgage early.
Every Little Bit Helps
Finally, there's the "every little bit helps" method to pay off your San Antonio mortgage early. Whenever you receive a bonus, tax refund or even a raise, put it towards your principal. Do you usually grab a $5 cup of coffee on your way into work? At $25 per week, that's another $1300 per year reduction in your mortgage principal. Do you buy lunch during the week? Tack on another $50 per week/$2600 per year towards your principal. Even cutting back to just a Friday splurge for lunch and a Monday morning coffee each week allows you to cut down your balance and pay off your San Antonio mortgage early...saving you thousands of dollars in the process.
LUX Move Up* by Christine Aldrete Banks, CRS, SRS, RSPS