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If you are in a financial position to pay off your mortgage early, doing so can be a wise decision. Especially after you are 15 years into your mortgage terms, your tax deduction will lessen since you are paying more in principal than interest. In this case, you are better off taking off years of your mortgage payment and having financial freedom. Having a home paid off gives a sense of security. There are many ways to reduce your loan terms that help you achieve your dream of owning your home outright.
Pay Extra Every Month
If you want to pay off your mortgage early with the flexibility of varying your extra payment, then you can simply add to the principal payment. When you receive your monthly bill, there is often a box you can check that allows you to add to the principal. You can write in the amount you want to add. It can vary depending on what you can afford that month. You can free up some cash by cutting back on unnecessary expenses, getting a part-time or seasonal job and cutting back on spending. This simple move can save a ton of money in the end since you will pay less in interest over the life of the loan.
Refinance into a 15-Year Mortgage
If you want to shave some years off the life of your mortgage, consider refinancing into a 15-year loan. Your payment will be higher, but you will pay far less in interest than you would in a 30-year mortgage. And a 15-year loan will be paid off before you know it. The disadvantage to this method is that you are tied down to higher payment. The previous method allows you to pay extra when you can, but there is no obligation. Take a 15-year mortgage only if you can truly afford the payment.
Pay Every Other Week
Instead of paying every month, split your payment in half and pay every other week. This adds two full payments to your mortgage in a year. By doing this, you decrease the length of a 30-year mortgage to 23 years. As with all of the other methods, paying off a mortgage early saves you money in interest.
Pay in Lump Sums
If you don't have any extra money at the end of the month or if you don't remember to add incremental payments, then you could try adding large lump sum payments to your mortgage. This would work well with tax refund checks. If you inherit money or receive an annual bonus at your job, you could utilize that money well by adding to your mortgage balance.
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