How to Pay an Extra Mortgage Payment a Year

Save money by paying off your mortgage early.

Save money by paying off your mortgage early.

Don't you just hate knowing that the real owner of your home is the bank? Work your way towards a debt-free lifestyle by paying off your mortgage early. This might sound like an insurmountable task, but you can succeed at this without much sacrifice at all. Paying just one extra payment each year can eliminate six years from your mortgage, saving you thousands in interest.

Mark your paydays for an entire year on a calendar. If you and your partner are paid on different dates, put a symbol, such as a dollar sign and the payee's initials on the date of each payday.

Write down the number of paydays you will each have during the 12-month period. Unless you are paid on specific dates, such as the first and fifteenth of each month, you should receive 52 weekly or 26 biweekly paychecks.

Divide your monthly mortgage amount by 52 or 26, depending on the number of pay periods you have in one year. If you and your partner each have a different number of pay periods, you may wish to add your numbers together and divide your monthly mortgage payment by the total. This should provide you with a manageable, relatively small, number.

Every pay period, set aside the payment amount you determined in the previous step. Put it into a savings account or hide it in a sock drawer. Anywhere that will prevent you from accidentally spending it is fine.

Send the set-aside funds to your lender along with your mortgage payment. Inform the mortgage lender that you want to pay the extra amount towards your principal. According to the Bankrate.com website, doing so will reduce the length of your mortgage and consequently reduce the total interest as well.

 

About the Author

Tricia Goss' credits include Fitness Plus, Good News Tucson and Layover Magazine. She is certified in Microsoft application and served as the newsletter editor for OfficeUsers.org. She has also contributed to The Dollar Stretcher, Life Tips and Childcare Magazine.

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