Dave Ramsey's 5 Tips for Paying Off a Mortgage Faster

Many people treat a mortgage like a permanent fixture, something they pay on autopilot for thirty years. Dave Ramsey disagrees. He’s helped thousands of people get out of debt, and his philosophy is simple: the less you owe, the more room you have for what matters.
While many experts zero in on credit cards and personal loans first, Ramsey puts the mortgage on the hit list too. Paying it off early is a big win, and you don’t need a windfall to start.
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Here are five of his tactics for chipping away at your home loan.
1. Make Extra Principal Payments
One of the quickest ways to pay off your mortgage is to make additional principal payments, according to Ramsey Solutions. You can add a little each month or make a lump-sum payment at year’s end. Just make sure your lender applies the extra money to principal. Otherwise, it can get swallowed by interest.
Every dollar that reduces your principal is a dollar you won’t pay interest on for the rest of the loan. Even modest monthly additions can knock years off your payoff timeline.
2. Switch to Bi-Weekly Payments
Most people make a mortgage payment at the beginning of every month. However, if you switch to making payments every other week, you’ll increase the amount you pay each year, and you likely won’t even notice the difference.
Here’s how it works. Typically, you’ll make 12 payments every year. By switching to bi-weekly payments, you’ll now be making 26 half payments each year, which would equal 13 whole payments, one more than before.
Say your payment is $2,000 a month. Instead of one $2,000 payment on the first, you’d send $1,000 every two weeks. That one extra payment each year can save thousands in interest and shave years off the loan.
3. Create More Room in Your Budget
Ramsey also suggests taking a good look at your budget. Are you spending money on things that aren’t earning their keep? This could include subscriptions, eating out, entertainment or any other discretionary spending.
If the answer is yes, cut those items from your budget and redirect the money toward your debts. Even finding small amounts can be helpful over the long term if you’re trying to pay off your mortgage sooner.
4. Refinance to a 15-Year Mortgage (or Pay Like You Have One)
Ramsey frequently recommends getting a 15-year mortgage because it reduces the amount of interest you pay over the loan period.
If it doesn’t make sense to refinance your mortgage from a 30-year to a 15-year, start making monthly payments as if you already have a 15-year mortgage. You can funnel the extra amount to your principal balance.
5. Apply Windfalls to Your Mortgage
It can be hard to stop yourself from spending when you have extra money. Whether it's from a raise, a bonus or some other means, a financial windfall can be a great opportunity if you can avoid lifestyle creep.
Instead of splurging on a new car, put most of the extra money toward the principal balance on your mortgage. The nice thing about this strategy is that it will require little change to the budget you were already living on.
The Bottom Line
You don’t have to use all five tactics at once. Start with the one that fits your budget best, whether that’s a bonus sent straight to principal or an extra $50 a month. Once you see your balance shrink, it gets a lot easier to find the next dollar.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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