How to Pay Off Mortgages Early
- 1). Pay off any higher-interest debt first. Usually credit cards carry the highest interest rate. Jane Bryant Quinn, in “Making the Most of Your Money Now,” says the highest-interest bills should take priority because they cost the most. (See Reference 1) If you also have installment debts or auto loans with higher interest rates, pay them off as well.
- 2). Make sure you have an adequate emergency fund and can continue funding your retirement. You don’t want to find yourself short of cash in an emergency or miss out on years of growth in your retirement accounts. Provide for your secure future in a balanced way.
- 3). Make sure your mortgage does not have a prepayment penalty. According to Bankrate.com, most mortgages do not, but some adjustable ones do. (See Reference 2) If you don’t know, examine your loan documents or call to make certain.
- 4). Find extra money in your budget every month to put toward the mortgage. You shouldn't sign up for a biweekly mortgage plan, which costs unnecessary fees, according to Bankrate.com. (See Reference 2) Reduce some of your regular expenses to find a surplus. For example, switch to basic cable or cancel an unused gym membership. Call around to find a better deal on your auto insurance. Carry lunch to work, and eat out less often. Add your savings to your regular check to the mortgage company every month with instructions to put it toward principal.
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Put your tax refund or bonus on the mortgage.money image by cherie from Fotolia.com
Put extra checks and found money toward paying off the mortgage. For example, use your bonus, profit-sharing or tax refund toward paying off the mortgage. - 6
Small amounts added to the mortgage will pay it off sooner.One Dollar - variations of Crumpled dollar image by PaulPaladin from Fotolia.com
Practice frugality in small ways if you want to retire your mortgage faster. Learn to save on food and household items. Find ways to save on water and utilities. Many books and websites offer such practical advice. (See the Resources section) Every few dollars you can add to the principal each month will put you closer to your dream of a fully paid mortgage.
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