The mortgage loan plans are designed in a profitable way for the banks and financial institutions, but still the middle class families have depend on this only means to buy their dream house. The terms for mortgages are as long as 20 - 30 years. The borrower keeps paying his/her monthly payment all along this period. The monthly payment consists of a part of principal amount and a huge interest part. Hence if the payment is made over the complete term the borrower pays nearly as much as more than double the price of the house he/she is buying. This enormous loss on the part of the borrower instigates him to constantly think of ways to pay off the mortgage faster. Paying off mortgage faster reduces tension and saves the borrower a huge interest amount over the long term mortgages.
* Paying bi-weekly - You may divide your total monthly payment into two equal halves and pay each half every two weeks. Hence, you pay twice in a month and end up making an extra annual payment instead of the regular twelve payments. This simple task would save you almost 6-8 years of your total mortgage term. But, some lenders charge an extra fee for this bi-weekly splitting and so, you must take care to consult your lender regarding this option.
* Making payments towards the principal amount - According to the mortgage plan, the early years of an amortization schedule are devoted to the collection of the interest and hence, a minimal share of your monthly mortgage payment goes towards the payment of the principal. It is always recommended to make some extra payment towards the principal whenever you get hold of some extra cash, for example, the annual tax -return can be very well used to pay towards the principal of the mortgage. Talk to your lender regarding the payment of principal and make sure to mark these payments as "extra payment towards the principal". These payments may be made as per your convenience, say, monthly, quarterly, bi-annually or annually.
* Increase in the amount of payments - Another handy way to bring down your mortgage faster is to raise the amount of your regular monthly mortgage payments. You may increase the amount as per your financial convenience, but, even an increase of 1/12th of your minimum monthly payment would contribute towards the deduction of at least 8 years of your total term of the mortgage plan.
* Refinancing your loan to a shorter term is a very easy way to pay off mortgage faster. This practice reduces your amortization schedule to a required term as per your convenience. You might avail of the lower interest rates in the current market while you refinance. This saves you huge amounts on the interest. On the contrary you might need to pool out some money from your pocket as refinancing fees and other legal charges but still you gain in the long term.
* Paying bi-weekly - You may divide your total monthly payment into two equal halves and pay each half every two weeks. Hence, you pay twice in a month and end up making an extra annual payment instead of the regular twelve payments. This simple task would save you almost 6-8 years of your total mortgage term. But, some lenders charge an extra fee for this bi-weekly splitting and so, you must take care to consult your lender regarding this option.
* Making payments towards the principal amount - According to the mortgage plan, the early years of an amortization schedule are devoted to the collection of the interest and hence, a minimal share of your monthly mortgage payment goes towards the payment of the principal. It is always recommended to make some extra payment towards the principal whenever you get hold of some extra cash, for example, the annual tax -return can be very well used to pay towards the principal of the mortgage. Talk to your lender regarding the payment of principal and make sure to mark these payments as "extra payment towards the principal". These payments may be made as per your convenience, say, monthly, quarterly, bi-annually or annually.
* Increase in the amount of payments - Another handy way to bring down your mortgage faster is to raise the amount of your regular monthly mortgage payments. You may increase the amount as per your financial convenience, but, even an increase of 1/12th of your minimum monthly payment would contribute towards the deduction of at least 8 years of your total term of the mortgage plan.
* Refinancing your loan to a shorter term is a very easy way to pay off mortgage faster. This practice reduces your amortization schedule to a required term as per your convenience. You might avail of the lower interest rates in the current market while you refinance. This saves you huge amounts on the interest. On the contrary you might need to pool out some money from your pocket as refinancing fees and other legal charges but still you gain in the long term.
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