Some homeowners are eager to get out of their mortgage early, with reasons ranging from eliminating the psychological pressure of debt to slashing interest payments. For retirees, especially, paying off a home loan early can help increase cash flow.
Whatever your motivation, paying down your mortgage ahead of time reduces the amount of interest you’ll pay on the loan. Here are some early payoff strategies to help you achieve that goal.
Can you pay off your mortgage early?
In most cases, you can pay your mortgage off early without penalty — but there are a few things to keep in mind before you do:
- Check for a prepayment penalty: Reach out to your loan servicer to find out if your mortgage has a prepayment penalty. Most mortgages don’t impose this fee, but if yours does, you’ll have to pay it. This can affect whether an early loan payoff is financially viable for you.
- Look for payment restrictions, if any: While you’re in touch with your servicer, make sure there aren’t any limitations on how and when you make additional mortgage payments. Some loans have terms that encourage you to follow the payment schedule. It’s important to ensure that whatever extra payment you make goes to the loan principal, not interest.
5 ways to pay off your mortgage early
1. Make extra payments
There are two ways you can make extra mortgage payments to accelerate the payoff process:
Biweekly mortgage payments
You can split your monthly mortgage payment in half and make biweekly payments instead. By doing this, you’ll end up making the equivalent of 13 months of mortgage payments in one year, instead of 12.
For more information on paying off your mortgage early visit the Scoop Blog
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