The faster homeowners can pay down their mortgage principal, the less they'll pay in interest.
With this in mind, Motley Fool analysts Nathan Hamilton and Kristine Harjes talk in the video below about two strategies homeowners can use to chip away at their principal balances faster.
Kristine Harjes: As you know, a mortgage is usually the biggest financial burden that one comes across in one's entire life, and so it's very important that you can find ways to pay it off as quickly as you can, and with as little money as possible. Hamilton, can you share with us today two ways to pay off your mortgage faster?
Nathan Hamilton: Yeah. There's one way we'll look at which is essentially tricking your brain. The first one is make biweekly payments, and here's why that works out. If you break out biweekly payments, you're going to make 26 payments per year. Essentially as you look at it normally, if you were to pay monthly, you would make essentially 12 payments, but paying biweekly, you're tricking your brain into saying, OK, I'm going to make one extra payment over the year, essentially 13 payments. It's an interesting way just to pay down your mortgage faster.
Harjes: Yeah. It's a nice mental trick to try to make it a little bit easier. What is the second trick that you'd like to share with us?
Hamilton: If you've got a 30-year mortgage, and your budget allows, but it's essentially treating that 30-year mortgage as a 20- or 25-year mortgage. What you're doing is ramping up the period to pay it down by increasing the payment. That's why I mentioned if your budget can support it. It does make sense, because ultimately if you can be out of mortgage debt five, 10 years sooner, that does open up the possibilities to pay for your child's tuition fund, secure your financial independence sooner, retire, invest in the market, any sort of financial opportunity.
Harjes: Right. The goal with both of these tricks that we have for you today is just to chip away at that principle. It's so important.
Hamilton: Get it done quick, so you're paying less interest.
Harjes: If you're interested in more good information on mortgages just like this, go to fool.com/mortgages to find highly qualified lenders and perhaps even a lower rate.