Three Ways To Pay Off Mortgage Early

When taking out a 30-, 20-, or even 15- year home loan the interest can add up, even with good rates.  Discover three ways to pay off your mortgage early and save big.  Whether you decide to make bi-weekly payments, refinance for current home loan, or pay additional principal of your loan the benefits you will be able to enjoy the benefit of owning your home clear and free much sooner than making regular monthly mortgage payments.

Bi-Weekly Mortgage Payments

This method of paying off a mortgage easy is simple. Breaking your monthly mortgage payments into two and sending them in this way will result in one extra payment each year. You will be making 13 payments each year instead of 12.  If you do the math, you will find that you can pay off your mortgage a few years sooner resulting in a savings in interest.

Before you decide on this option be sure that you can commit to bi-weekly payments.  Also, check with your lender as some charge a fee for this type of program.

Refinance Into A Shorter Loan

You can save a substantial amount of money by refinancing a 30-year loan to a 15-year loan.  Not only will you paying off a mortgage early, but the rates are typically lower the shorter the term.  Even if you do not get lower interest rate the 15 year reduction in payments will offer substantial savings.

Keep in mind that when refinancing a home loan you may be required to pay closing costs and other fees unless you choose a no-cost refinance option.  While your mortgage payment will increase, you will finish paying for the home much quicker.

Add Next Month’s Principal To Your Current Payment

This is another simple method that will add up to savings.  When you make your mortgage payment each month, add the principal from the next month to your payment.  Your mortgage statement will indicate your monthly principal, taxes and insurance as well as principal.

The advantage of paying ahead the principal is you will in essence be paying down your mortgage much quicker.  You will not see a difference in the beginning, but over time you will clearly see the benefit.

One thing to keep in mind is that the principal will change as your mortgage is paid down.  Since the overpayment will continue to increase, it may become a struggle to keep up with this early mortgage payoff method.

Before you make your final decision take some time to review your options.  Be sure that you can keep your commitment, especially if you join a program with your lender.  It may be tough at first, but once you get into the habit of making additional payments it will come natural. Wise decisions now will pay off in the long run.