How To Pay Off Mortgage Early
Need to know how to pay off a mortgage early? Paying off your mortgage early requires dedication, but allows you to own your home free and clear. Without a mortgage payment, you can use the income you previously put toward paying down your home loan to pay other bills or simply enjoy your life. Once you pay off the mortgage, the lender will lift the lien on your home. Should something happen to you, your loved ones can then live in the home without paying a mortgage or living in fear of foreclosure.
- Make a larger mortgage payment each month to pay off a mortgage early. Sending a larger than normal payment to your lender every month can allow you to pay off your mortgage years ahead of schedule. Make sure to notify your lender that you want your additional payments applied to the principal balance of the loan.
- Send mortgage payments twice a month to pay off a mortgage in half the time. Since most consumers receive their paychecks bi-monthly, paying twice a month is often less financially restrictive than sending your mortgage company one large lump sum each month. If you cannot afford two standard mortgage payments a month, send extra money anyway. No matter how little you can afford to put toward additional mortgage payments, small amounts add up and will contribute to an early mortgage payoff date.
- Refinance your home to a lower interest rate. If you have good credit, you may consider attempting to refinance your home to a lower interest rate. When you refinance, you apply for a new loan that pays off your old mortgage. You then repay the new loan under the new, lower interest rate. A lower interest rate allows for lower mortgage payments. Thus, you can continue to send the same payment amount you had previously and pay off your mortgage early.
- Structure your early mortgage payoff by refinancing to a shorter repayment period. This is a good option if you badly want to pay off your mortgage early but lack the discipline necessary to make additional payments. When your lender refinances your home to a shorter repayment period, your monthly mortgage payments will increase. You must pay the higher payment to remain current on your loan, but you can pay off the mortgage in as little as fifteen years.