5 Ways to Pay Off your Mortgage Early

By: Craig Berger

Mortgage payments represent the bulk of many homeowners' monthly bills, and they are an expense that a fair number of people would probably like to dispatch as quickly as possible. A 15-year or 30-year mortgage may seem like something that you will have to pay forever, but there are ways to cut down the term.

No. 1 -- Make Larger Monthly Mortgage Payments

This one is probably the most obvious. If you pay twice as much each month, you will pay off your mortgage loan twice as fast (actually faster, given the decreased capitalization). Of course, you should be sure that you can afford to do this, and there may be other options that are less tough on your budget.

No. 2 -- Pay Biweekly Mortgage Payments

This is the same idea as the above, but in a more budget-friendly fashion. If you receive a paycheck twice a month, you can pay your mortgage twice a month, without having to worry about coming up with one giant payment at the beginning/end of every month.

No. 3 -- Lump Sum Mortgage Payments

If you should come into a large sum of money, you can always sink it right into your mortgage loan (subject to lender restrictions). This will save you money in the long run on interest payments. However, be sure you don't need some of that money for emergency expenses or other reasons before sending it all to the bank.

No. 4 -- Shorter Loan Term

Here's a way to get the bank to figure it out for you. If you contact your lender and say you want to switch from a 30-year mortgage to a 15-year mortgage, they will make the necessary calculations and adjust your monthly payment. Again, you need to be sure that you will be able to afford the new monthly rate.

No. 5 -- Refinancing

People refinance when they have the opportunity to get a lower interest mortgage, essentially swapping their old mortgage for the new one and reaping the benefits of the lower rate. These benefits include a lower monthly payment, but they don't have to. If you continue to pay the same monthly payment each month as you did before, you will be able to pay the loan off faster without any noticeable change in your finances.

Talk to your lender when considering these options. Some lenders may incur a penalty for pre-payment or have a restriction on the amount you can repay at any given time. Find the option that works best with your particular lender and start knocking down that mortgage loan today.

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