Little-known methods to pay off your mortgage faster

Ways to pay your mortgage fast

If you want to speed up the rate you pay off your mortgage, you could find the results financially-gratifying.

"Any way you want to get money to pay down your mortgage is great," says Los Angeles-based mortgage broker Bill Rayman.

But how you apply your financial resources to pay down your mortgage can be very relevant to the success of speeding up the repayment process.

According to Tony Yousif, a senior loan consultant with American Capital Corporation, based in El Segundo, California, putting together a solid plan to make faster home loan payments can pay off handsomely in the loan run.

Are you interested in speeding up your mortgage payments? Keep your eyes on the following little-known tips we've found to help you pay down on your home loan at a faster rate.

Tip #1: Keep an Eye on April 15th

Tax Day traditionally comes once a year on April 15th. And if you're a borrower with a house note, it also can become the day you - ceremonially speaking - speed up your mortgage payments.

"Using a tax refund might be a good practice for the average borrower to help pay down their mortgage," Yousif says. "A lot of times when the refund comes, the government wants you to buy a new car or furniture."

But instead of splurging on those new wheels or living room sets, homeowners might do well to earmark tax refunds for an additional principal payment on their mortgages.

For the average taxpayer/homeowner who gets a refund, the amount might equal a couple of extra house payments a year.

In fact, according to the Internal Revenue Service, the 2012 end-of-year filing season statistics showed the average refund was $2,803 in 2012.

Tip #2: Use Your Credit Card for Mortgage Rewards

From vacations, to cash back, to prizes, it seems you can get almost anything nowadays as a reward for using your credit card. But did you know you could also use those rewards to pay your mortgage off faster?

It's true - this type of reward program does exist. One example of it is the Home Rebate Card through Wells Fargo. For this particular card, you can earn 1 percent cash back on all of your purchases, and that money is automatically transferred to your mortgage principal each month

Have a good cash back rewards card already? You could have the same end result by simply adding that cash back amount to your mortgage principal each month.

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Tip #3: Try to Make Large Mortgage Payments Early On

To pay down a mortgage faster, it might be a good - and little-known - idea to get a speedy start right out of the gate.

Valerie Saunders, the former president of the Florida Association of Mortgage Professionals, says that with a 30-year mortgage, it takes a good number of years before the emphasis of the mortgage payments shifts from paying the interest to paying the principal balance. Thus, one of the best strategies for paying down the loan might involve making larger payments from the beginning. This can be an especially good strategy for those who have extra income, and have minimal expenses - like if you have no children yet, for example.

"You pay the highest amount of money toward interest when the loan is at its starting point, but as you get closer to maturity, and even around 10 to 15 years, more of the payment goes toward the principal balance," Saunders says. "If you do have the capability, try applying funds toward the principal as early as possible."

In this regard, first-time homebuyers or people transitioning into a new home loan should consider front-loading principal payments to get ahead or - as one might say - pay it forward.

Tip #4: Split up Your Payments

The old Neil Sedaka song suggests that, in romance, "Breaking Up Is Hard to Do." But if you want a chance at paying off your mortgage faster, breaking up your payments is a little-known strategy that can make the process easier than you might imagine.

"Making multiple payments each month does save a little bit of interest and time on your payments because you are technically borrowing less money on a daily basis and your interest is lower," Rayman says.

For example, let's say your monthly mortgage payment is $2,000. Instead of paying $2,000 each month though, you could pay $1,000 every 14 days.

"If you pay every 14 days, you are making 26 (half) payments or giving the bank two extra payments a year," Rayman says. That equals one extra monthly payment per year, and "[t]hat will help you in the sense of paying your mortgage down faster," Rayman says.

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