Pay Off Your Mortgage Early or Pay Your Mortgage Down

Written by ysdata on July 1, 2009 – 4:27 pm

Pay Off Your Mortgage Early or Pay Your Mortgage Down

Pay Your Mortgage Off Early Which is best — paying off your mortgage early or paying down your mortgage? The truth is — It depends on your personal situation. With bank interest rates dropping to “all times lows”, paying off or down your mortgage maybe your best investment at the moment. So, we will cover both “Paying off your mortgage” and “Paying down your mortgage” in either option your mortgage will be paid off early.

How to Pay Off Your Mortgage Early

Below are 4 options to either pay your mortgage off or pay down your mortgage.

Pay Mortgage Off Early Option 1: Refinance - By refinancing your current mortgage you can shorten the term (duration) which results in paying your mortgage off early. However, refinancing can have some other factors to consider. When you refinance a mortgage you should do it to get a better rate. So, if your current interest rate is lower than the refinance interest rate this option may not be the best “Pay mortgage off early” option for you. The other factors to consider are: paying closing costs and other fees associated with refinancing.

Pay Mortgage Off Early Option 2: Biweekly Payments - Biweekly mortgage payments became popular a few years ago. By making biweekly payments you are essentially making an extra payment each year. By making that 13th payment verses 12 payments you will achieve paying your mortgage off early (over time). The off factor to this option is that mortgage companies sometime charge a fee to use this program. If your mortgage company has a fee associated with biweekly payments this may not be the best option for you.

Pay Mortgage Off Early Option 3: Fixed Overpayments - like biweekly mortgage payments, overpayments can shave years off of your mortgage. However, overpayments usually don’t have a fee associated with them. Your mortgage payment vouchers should have a place where you can allocate a given amount to the principle payment. Here is where you can decided which amount you would like to pay. The good factor with overpayments is that you can decide how much over each month you are willing to send in. Over time you will see that your mortgage will be paid off early.

Pay Mortgage Off Early Option 4: Windfall - Let’s say you hit the lottery or some kind of other windfall of money, you can just pay your mortgage off. Once your mortgage is paid off you can take the monthly payment and invest that into another investment resource. By paying off your mortgage early with a windfall you can achieve “piece of mind” knowing your mortgage is paid, and increase your savings too.

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