Thursday, February 9, 2017 / by Jenel Yeamans

How to pay off your mortgage early

If you share the same dream as most Americans, paying off your mortgage would be a dream come true. However, how can you accomplish this without breaking the bank? The answer may be yes! Check out these six tips to see if any will work with your budget.

Contact your mortgage company and see if they offer a bi-monthly payment plan. If they allow this plan, you will be able to make one additional mortgage payment every year. Another way to accomplish this on your own would be to divide your current monthly house payment by 12 and then add that amount to each monthly payment. By making that one extra payment each year, you will save approximately $24,000 in interest and pay off your loan four years early.
A more extreme option of the above tip is to make one additional payment each quarter. By paying four extra payments a year, you will save an estimated $65,000 in interest and pay off your loan 11 years early.
A smaller and possibly more manageable option is to round up your monthly payment each month. For example, if your monthly payment is $1897 per month, round your payment up to $2000 each month. What might seem like a small step, could add up hugely in the end.
Keep a watchful eye out on the market and watch for interest rates to drop. Consider refinancing to reduce your interest rate or even shorten the length of your loan to save thousands.
Consider taking any pay raises or bonuses and putting that additional money directly to your mortgage. If your budget was comfortable before the raise or bonus, chances are you can survive without it now all while shaving years and dollars off of your mortgage.
Use an online mortgage payoff calculator to set a target payoff date to work towards. This will help you to get a full perspective on how a little can go a long ways. Once you set a reasonable and obtainable goal, work to reach this goal and stay on track.

Although paying off your mortgage early will mean that you will no longer receive a tax write off, the benefits can be enormous. However, you should take a big long look at your personal situation to determine your own pros and cons.

By paying off your mortgage early, you will be able to reduce the overall interest amount paid on the life of the loan. By doing this, you will save tens of thousands of dollars. You will also be able to gain peace of mind by owning your home, and you will be able to enjoy financial security and freedom to pursue other ventures.

Last Helpful hint: Always check with your personal mortgage company before you make additional payments. Some companies have rules that may not allow you to make extra payments without a fee or penalty. Also always assure that the additional payments are applied directly to the principal and not to the next months payment.

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