If you bought a home, you probably needed to take out a mortgage to help you finance your purchase. Buying a house is a costly investment, which means homeowners usually have high amounts of debt they take on in order to afford their new homes.
When you took out a mortgage, it was either a conventional loan or one that was backed by the government. When figuring out how to get out of debt, you’ll first want to check and see the loan you got.
Banks and other private entities are responsible for issuing conventional loans. On the other hand, there are different types of government mortgages. These include:
- VA loans, which are insured through the U.S. Department of Veterans Affairs.
- FHA loans, which are insured through the Federal Housing Administration.
- USDA loans, which the U.S. Department of Agriculture backs.
Once you determine the type of loan you’re paying off, you’ll also need to check on the interest rate you’re responsible for paying. You either have an adjustable rate, which means your interest rate can change, or you have a fixed rate, which means your interest rate remains the same throughout the duration of your loan.
Managing Your Mortgage Debt
If you want to pay off your mortgage, it’s important to know there are different strategies available to assist you. For example, you can:
- Make your mortgage payments every two weeks instead of once a month. With this trick, you can save thousands of dollars over time. If you make half of your monthly mortgage payment every two weeks, you’ll end up making 13 months’ worth of payments every year. This will not only save you money, but it will help you pay off your loan faster.
- Refinance your mortgage. If you have a strong enough credit profile, you might be able to refinance your current mortgage loan. This allows you to get a new loan that suits your current lifestyle. Among other perks, it can help you pay off your loan sooner or reduce the amount you’re responsible for paying every month.
- Pay more toward your principal. Your loan principal refers to the amount you borrowed from a lender. The more you pay toward your principal each month, the quicker you might be able to pay off your loan. This can also reduce the overall amount you would need to pay in interest.