Five ways to pay off your mortgage early
If you get paid twice per month, make a payment each time you get a paycheck. You could also make an extra lump-sum payment at the end of the year. Another simple way to put more toward your mortgage is to round your payments. If each of your payments is $1,004, then pay $1,010 each time.
How to pay off your mortgage early
Tips to pay off your mortgage early
Pay off high-interest debt before making extra mortgage payments – Other debt like credit card balances might have much higher interest rates than your mortgage, so if you pay off your mortgage early instead of tackling that, you could end up behind.
Adding Extra Each Month
Just paying an additional $100 per month towards the principal of the mortgage reduces the number of months of the payments. A 30 year mortgage (360 months) can be reduced to about 24 years (279 months) – this represents a savings of 6 years!
3. Make one extra mortgage payment each year. Making an extra mortgage payment each year could reduce the term of your loan significantly. ... For example, by paying $975 each month on a $900 mortgage payment, you'll have paid the equivalent of an extra payment by the end of the year.
The additional amount will reduce the principal on your mortgage, as well as the total amount of interest you will pay, and the number of payments. The extra payments will allow you to pay off your remaining loan balance 3 years earlier.
Considerations. There are other small advantages to prepaying monthly instead of yearly. With each regularly scheduled payment on a fixed rate loan, you pay a little more principal and a little less interest than on the previous payment. So the sooner you prepay, the further ahead on the payment schedule you will jump.
1. There's a big opportunity cost to paying off your mortgage early. ... Another opportunity cost is losing the chance to invest in the stock market. If you put all your extra cash toward a mortgage payoff, you're losing the chance to earn higher returns and benefit from compound growth by investing in the stock market.
The biggest drawback of paying off your mortgage is reducing your liquidity. It is far easier to get money out of an investment or bank account than it is to get money from the equity you've built in your home.
Pay off other debts
If you've finally paid off your mortgage debt, keep that trend going by applying your monthly mortgage payment to other debts. Start with high-interest debts, such as any unpaid credit card balances.
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