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Homeowner Tips: Accelerated Mortgage Payoff Options
Bi-Weekly Accelerated Payoff Option This is one of the most popular accelerate mortgage payoff options being offered. In this set up, your lender (for an initial setup fee, and a small monthly fee) will set up your monthly mortgage payment to be paid twice a month as opposed to once a month (half on the 1st and the other half on the 15th). Your monthly payment is still the same but impacts your overall payments differently. What this option amounts to is 26 total half payments or 13 full payments a year instead of 12 full payments a year. At the end of the year, you will have made the equivalent of one additional mortgage payment on your loan. By doing this year in and year out, you can knock off approximately 7 years of a 30-year note and save thousands of dollars in interest on your loan. (Example: $1000.00 monthly mortgage payment due on the first of every month. Instead of making a $1000.00 mortgage payment on the first, you will make a $500.00 payment on the first and another $500.00 payment on the 15th. The full payment is still being made). Increased Monthly Payment Option Another way to accomplish the same thing is to take your total mortgage payment, divide it by 12 (months in a year), and send that amount in and applied to the principle with your normal monthly payment. What this will equate to at the end of the year is one full mortgage payment being made at the end of the year. Example $1000.00 mortgage payment, divided by 12 equals $83.33. So each month you send the lender a payment of $1083.33 and ask that the $83.33 be applied to the principal of the loan. $83.33 applied 12 times a year means you made one complete mortgage payment at the end of the year. Again, year after year of this knocks off significant time on the mortgage and saves thousands in interest.
One other method to consider is simply making one large contribution to the mortgage once a year (tax refund, bonuses from work, federal tax stimulus checks). This method is a little more hit or miss, but could get you there with a little discipline.
Which ever method you choose, remember it’s the ongoing consistency that makes them effective. Chris Stanley |
As of late, I have had several clients ask about ways of getting their mortgages paid off early or at least earlier than scheduled. Now the first thing that comes to the minds of most is "hit the lottery" or "marry into some $", but before you go to those extremes, there are viable options for you to explore if you are serious about having you mortgage paid off 
Lump Sum Contribution Payment Option
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