Only 34% of Americans own their homes free and clear. All other homeowners have a mortgage they're chipping away at. If you have a mortgage, you may want to consider paying it off early.

Before you begin, you should know some states allow lenders to implement prepayment penalties, which means it could actually cost you more to pay off your mortgage early. Regulations vary per situation, so before you proceed, find out from your lender if you'd face a prepayment penalty on your mortgage.

  1. Bi-weekly payment plan- Pay half your monthly payment every two weeks. Some months will have an additional payment, this could add up to an extra full payment per year.
  2. Matching principal payment plan- Add your initial principal payment to every monthly payment that follows. This shaves years off your mortgage and saves interest.
  3. Make an extra full payment per quater- In some cases, this can take up to 11 years off your mortgage.
  4. Cash influx- Put unexpected cash- like an inheritance, birthday gift, tax refund, etc. - toward your principal balance.
  5. Refinance to a 15-year loan- This is helpful if you're on track to pay it off early, rates are low, and you're early in the mortgage. Consult a mortgage professional if you're not sure.
  6. Divide your mortgage payment by 12- Add this amount to your montly payment and make one extra payment a year.
  7. Do what you can- Make small budget cuts and save money to contribute towards your principal.

Make sure you talk to your bank or lender and tell them your plans before you get started. If you want to learn more about these best practices, talk to a mortgage professional. Call our office for a great referral!

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