How To Pay Off Your Mortgage Early

Despite what you have read in the papers and magazines lately, there are actually people who try to avoid debt or burying themselves in debt. Hard to believe, I know. In fact there are some people who like to own their house free and clear of any mortgage. Why would someone want to do that? First, not having to pay a bank or a lender huge sums of money in interest is good motivation. Frequently when you pay back a 30-year mortgage, you pay back over twice as much as you borrowed. No wonder banks like to make mortgage loans. Another reason is that people want to live debt free. No more loans to deal with, owning your home free and clear is a great feeling.

How to payoff your mortgage early isn’t hard or complicated to do. You may get a run around from the bank because they would rather have you pay all that interest for years to come. Still others will try to sell you a mortgage acceleration plan for hundreds of dollars to show you how to prepay. Still others will debt your checking account for you to help you prepay. All of this is nonsense. Prepaying your mortgage is easy and you don’t need to pay any one to do it for you. This article will give you some background on how to prepay your home mortgage.

Before prepaying there is something you have to look for in your mortgage agreement. You will need to see if there is a prepayment penalty if you pay your mortgage off early. This generally applies to mortgages that are totally paid off in 2 to 3 years due to refinancing. What you need to look for (or call the bank to ask) if there is a prepayment penalty. If you are just adding a few dollars each month to the principal, then it shouldn’t trigger a penalty. Check first!

Here comes the easy part. Each month when you make your mortgage payment, just add a few dollars to the payment. You can write it as one check, but specify on the check that the additional amount on the check go towards principal only.

Let’s look at an example on how much you can save. Lets take a $200,000 30 year fixed rate mortgage at 6%, with a monthly payment of about $1200 a month. By adding just $25 a month to the payment, you will save about $15,000 in interest charges and pay the loan off in about 28 ½ years. If you could prepay $200 a month, you would save over $80,000 in interest and the mortgage would be paid of in 21 years.

Look to see if prepaying is right for you. YOU could be saving thousands of dollars easily.