How to Pay Off Your Mortgage Early

For most people, a home is both the biggest investment they will ever make, as well as the greatest debt they will ever incur when factoring in a mortgage. True financial freedom often requires paying off this mortgage, but that often takes 15-30 years (or longer).

For some, it is possible to pay off their mortgage even faster. Here are some ways:

If you can refinance, opt for a 15-year loan over a 30-year. Not only are these loans half the term, they often come with more favorable interest rates. This strategy may not be for everyone. Refinancing may be expensive, and a 15-year note does come with higher monthly payments-something not everyone can afford. But if you can, do it!

Another way of paying down your loan faster is making an extra mortgage payment each year, also known as bi-weekly payments. Payments are split in half and are paid every two weeks, resulting in one extra monthly payment per year. This method alone can turn a 30-year mortgage into a 22-year loan. If your bank requires you to sign up for a program like this for a fee, say no. Instead, add 1/12 of a payment to each monthly payment to create the equivalent of 13 monthly payments per year.

Finally, consider rounding up your mortgage payment. If you pay $950/month currently, you likely consider it to be $1000 in your head, so make it that way each month to pay down your balance quicker. Just be sure the extra money goes towards principal.

Paying off your mortgage quickly has multiple benefits. No matter which way you choose to approach this, you simply need to start somewhere – then stay consistent.

About cozbycpa

Heather L. Cozby is a CPA on the South Shore and Cape Cod. The managing partner of Cozby & Company, LLC, Heather has the resources and experience necessary to provide quality professional services on a timely basis and at a reasonable cost. She specializes in tax planning & preparation; audit, review & compilation services; management advisory services; bookkeeping; and accounting. Her unique niche is in working with homeowners’ associations and condominium trusts, advising with rental real estate, and providing outsourced financial consulting for mid-sized companies. She is more entrepreneurial than most accountants, and offers the best of both worlds - providing the services of a larger firm while retaining the ability to connect with her clients on a personal level.
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