![]() One surefire way to pay off your loan sooner and pay less interest is to increase what you send your lender each month. Here are three solid strategies to pay off your mortgage early. How much interest you’ll save - are your goals being met?.You’re free to pay a little extra toward your mortgage whenever you have cash on hand.īut if the goal is to pay off your mortgage early, it helps to have a prepayment plan. Otherwise, you’ll need to indicate that your extra payments should be applied that way. Make sure your lender or servicer is applying any extra money toward principal as its first priority. That will reduce your loan’s term and enable you to pay off your loan more quickly, Saadeh explains.īut you don’t want any extra payments to go toward your loan’s interest that won’t reduce your principal owed or shorten the life of your loan. “Or you can do so at more frequent intervals during the year,” he says.Īny time you pay extra on your mortgage, you need to indicate to your lender that the money should go toward loan principal - not interest.īy paying off some of your loan principal, you reduce the amount of that will accrue on your mortgage in the future. You can make additional payments applied to your principal at the time your mortgage payment is normally due, or earlier. Real estate attorney Rajeh Saadeh explains the concept behind accelerated payments: Is there a penalty for paying off your mortgage early?.How to set up extra payments with your lender.Find out if you can refinance to a shorter loan term Just pay a little extra on your mortgage when you’re able.īy making extra payments, you can pay off your mortgage faster and save on interest. Many homeowners can’t afford refinancing to a shorter, 15-year loan term because payments are quite a bit higher.īut there’s a way to pay off your mortgage early without any fees or penalties. If you have a mortgage, chances are it’s a 30-year loan. Aug6 min read Paying extra is the cheap, easy way to pay off your mortgage early
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