It should be very simple to pay off mortgages early if you can afford it. If you should do so, you can follow a few tips on how to clear your mortgage as early as possible.
Simply pay more – if you are paying monthly interest and principal, you can divide them by 12. Add that to the monthly payment, which makes it 13 payments annually. Just inform the mortgage-servicing firm before making extra payments for that matter though.
Refinance using a mortgage with shorter-term – it is possible for you can pay a 30-year mortgage in just 15 years. So, instead of having 4.5% fixed interest rate for your mortgage, you can refinance using a 15-year loan at a lower 4% rate.
Make extra mortgage payments yearly – you can do this by making 13 payments in a year. Do this by saving up throughout the year and make extra payments. You can also take advantage of extra checks that you receive to pay off the mortgage.
Throw extra money at your mortgage – if you have money via unexpected sources, you should funnel some of that or the entire amount to your mortgage. For instance, if you make lump-sum payments, then you can pay off a couple years and 4 months earlier.
Paying off mortgage early can have positive and negative effects, nonetheless. The positive being the ability to cut the interest rate on the mortgage. However, the downside is that it can be difficult to predict the payoff date for mortgage. Thus, if you throw in too much, you wouldn’t have enough money for other needs.
If you are going to pay off early, make sure that you seek help from your financial adviser. Thus, you will be able to refinance or manage your mortgage at a more favorable rate.