Only 34% of Americans own their homes free and clear. All other homeowners have a mortgage they’re chipping away at. If you have a mortgage, you may want to consider paying it off early.
Before you begin, you should know…
Some states allow lenders to implement prepayment penalties, which means it could actually cost you more to pay off your mortgage early. Regulations vary per situation, so before you proceed, find out from your lender if you’d face a prepayment penalty on your mortgage
If there is a penalty
Decide if it’s worth it to you. Fines are typically a percentage of the mortgage itself. Carefully evaluate the risk versus reward before committing.
If there is a penalty
Decide if it’s worth it to you. Fines are typically a percentage of the mortgage itself. Carefully evaluate the risk versus reward before committing.
7 STRATEGIES TO PAY OFF YOUR MORTGAGE EARLY
Bi-weekly payment plan
Pay half your monthly payment every two weeks.
Some months will have an additional payment, this
could add up to an extra full payment per year.
Matching principal payment plan
Add your initial principal payment to every
monthly payment that follows. This shaves years
off your mortgage and saves interest.
Make an extra full payment per quarter
In some cases, this can take up to 11 years off
your mortgage.
Cash influx
Put unexpected cash – like an inheritance,
birthday gift, tax refund, etc. – toward your
principal balance
Refinance to a 15-year loan
This is helpful if you’re on track to pay it off
early, rates are low, and you’re early in the
mortgage. Consult your mortgage professional
if you’re not sure.
Divide your mortgage payment by 12
Add this amount to your monthly payment and
make one extra payment per year.
Do what you can
Make small budget cuts and save money to
contribute toward your principal.
