I receive a ton of calls from clients asking the best way to cut down the term of their mortgage. With how low interest rates have gotten in the past 3 years some homeowners are able to refinance into a 15 or 20 year fixed while keeping their monthly payments the same. For those homeowners a refinance is great, but what about all the people who have refinanced in the last year and already have a rate in the low to mid 3%'s?

some homeowners are finding that their interest rates are already so low that a 15 yr or 20 yr fixed increases their payment to a level they can not afford. However they still understand the benefit of paying off their mortgage as early as possible. For these homeowners there is a very simple solution that does not require a refinance and is quite effective in reducing their overall term.

The method is simple, all they need to do is contact their loan servicer and request bi-weekly payments. Typically with little change to a homeowners monthly outlay they are able to reduce their loan term anywhere from 3-8 years depending on their term, interest rate, and loan program.

Often times I will tell home owners that they can achieve a similar effect by paying an additional sum every month toward principal. What I have found is that even though the homeowners in this situation fully intend on making the extra payments they do not. For this reason alone requesting bi-weekly payments is a good idea if you are looking to reduce your loan term without refinancing.

Ultimately if you are considering reducing the term of your loan the first thing you need to do is contact a local professional to discuss what refinance options are available to you with a shorter term. If those options do not quite fit your budget, the next logical step is contacting your servicer and setting your account up for bi-weekly payments. Please note a 10, 15, 20, or 25 year fixed may be much more beneficial depending on your current interest rate, so your first stop should be a local professional, and if the payments don't make sense the last stop is your current loan servicer.

Always feel free to contact me with any questions you have regarding term reduction and if it makes sense for you.

Thank you,

Augustus Bukowski