The thought of living mortgage free excites many homeowners. Digging down to pay off the mortgage means less interest paid and a faster payoff. Depending on how aggressively you pay down your mortgage, you can shave off years of writing out the monthly mortgage check. Mortgage rates are typically lower than interest on other debt, such as credit cards. If you have other forms of debt, consider paying off those accounts first.
Read your mortgage paperwork to make sure your lender isn't going to hit you with prepayment penalties for paying down your mortgage. Call your lender if you aren't sure about penalties.
Refinance your mortgage for a lower rate if your current interest percentage is high, which will reduce your monthly payment. Continue paying the higher amount of your previous payment so the extra amount lowers the principal faster. Don't cash out the equity in your home when you refinance; this will extend the length of your mortgage and possibly cause you to owe more than the value of the home.
Pay your mortgage biweekly to squeeze in an extra payment each year. Divide your normal monthly payment in half and pay that amount every two weeks. For example, if your monthly payment is $1,200, pay $600 every two weeks all year long. This results in an extra $1,200 paid per year.
Review your household budget to figure out how much extra cash is available. Add this amount to your monthly mortgage payment to apply toward the principal. A lower principal means less interest, which pays off your mortgage faster.
Apply any extra money you receive, such as a tax refund, cash gifts or bonuses, toward the mortgage. Sell items you no longer need to make extra cash that can go toward a lump-sum payment on the mortgage.
- The first payment of a mortgage isn't due until the second month. Making a payment the first month anway knocks off a chunk of the principal right from the beginning.
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