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How To Pay Off a Mortgage Sooner


When you pay extra on your mortgage, you chip away at your principal balance. Be sure to check with your mortgage company so that you don't get charged prepayment penalties. Write a note with your extra payment that says you want it applied to your principal balance, not the next month's payment.

Here are tips to pay off your mortgage sooner without a mortgage accelerator program:

  • Look for mortgage payoff calculators online. They'll help you estimate how quickly you can pay off your home.
  • Make biweekly payments. In other words, make half your mortgage payment every two weeks.
    • Biweekly payment plans consist of 26 half-payments a year, so you'll pay as much as you would if you made 13 monthly payments.
    • The extra payment can knock eight years off a 30-year mortgage, depending on the loan's interest rate.
    • You can find your biweekly payment by checking your monthly statement to see the principal and interest portions of your payment balance and dividing the number by two. If your usual payment is $1,500, your biweekly mortgage payment is $750. Don't forget to include the tax and insurance portion of your payment each month.
    • You'll need to find out whether your mortgage company handles biweekly mortgage payments. Don't pay a fee to initiate a biweekly mortgage plan.
    • If the lender isn't open to biweekly payments, open a new bank account just for your mortgage payment. Deposit your half-payment every two weeks and use that money to make your full mortgage payment on every second deposit.

Every dollar you add to your regular payment each month puts a bigger dent in your principal balance. You don't have to double down to make a difference — just add one extra payment each year to knock years off your mortgage.

Here are more speedy tips to pay off your mortgage sooner. For each of them, imagine a $1,500 monthly payment on a 30-year mortgage.

  • Making an extra house payment each quarter will allow you to pay your mortgage off 11 years earlier and save $65,000 in interest.
  • Bring your lunch to work. Trading lunch out for a mortgage payment to apply an extra $100 a month of lunch money to your mortgage will help you save more than $28,000 in interest.
  • Adding just $20 to your mortgage payment each month will help you pay off your mortgage a year early and save $7,000 in the process.
  • Adding a daily $3 of Starbucks money to your mortgage payment each month would trim $25,000 in interest and four years off your loan.
  • Refinancing a longer-term mortgage into a 15-year loan will save you money on interest. If you already have a low interest rate, save on the closing costs of a refinance by simply paying your 30-year mortgage like it's a 15-year mortgage. You'll increase your payments to pay off your mortgage much earlier.
  • Maximize your down payment. Put at least 10% down at the closing table. If you can swing 20% down, you'll avoid paying private mortgage insurance, which typically costs between 0.5% and 1% of the loan annually. Why give the bank extra money each month if it doesn't pay your mortgage down faster?

By refinancing to a shorter-term loan, reconfiguring your payments for a shorter term, paying a little more each month or even one extra payment each year, and paying a lump-sum payment toward your principal balance when you come into extra cash — a bonus at work, a tax refund or a sizable inheritance — you can shave time and interest from your mortgage.

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The information provided in this email newsletter is for general guidance only, and does not constitute the provision of legal advice, tax and accounting advice, real estate investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional real estate, tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Home value estimate calculators provided herein are general estimations based on publicly available data and should not be used as a substitute for a professional appraisal. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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