Paying Off My Mortgage Early – 3 Ways To Do It

     Paying your mortgage off early sounds like a good idea, eh? Let alone, having the peace of mind from no house payment, accelerating your mortgage payoff saves you tens perhaps hundreds of thousands in interest.
     Buyer Beware! If you pay attention, you will see plenty of ads out there for services that help accelerate your mortgage payments. I am here to tell you that you can save your money by taking matters into your own hands.
     All it takes is knowledge about some of the techniques you can use to pay your mortgage. Then you pick a technique and stick with it as it does take some effort and discipline. Sure, you could buy an acceleration plan from a mortgage services company, but all you would be paying for is someone to tell you what to do, or for some fancy expensive software program to spit out information based on what you tell it anyway. Do you really need to pay someone to do this? I think not!

Mortgage Acceleration – Bi Weekly Payment Plan as One Solution
     The basic concept almost all of these companies work off of is the Bi Weekly Payment Plan, or said in another way, making one extra mortgage payment over the course of a year rather than 12.
     Easy does it, I can hear you right now, “I can’t make an extra payment all at once.” Well, keep reading; here are a few ways to make this extra payment without having to do it all at once.
     1. Add another 8.3% on to your payment each month. That’s not so bad, right? If your normal payment is $1,000, it would increase to $1,083. There’s no need to make any special arrangement with your lender with this approach — the company will automatically deduct the extra that you pay from your principal balance.
     2. Make a half payment every two weeks. Many of us forget about it, but there are indeed more than four weeks in a month. That extra couple of days each month add up over the course of time. If you think about it, you make 12 mortgage payments a year. If you start paying your mortgage every other week with half of your scheduled monthly payment you will end up making 13 payments over the year. There are 52 weeks in a year. Divide this by 2 because you are making payments every 2 weeks and you get 26 payments. Divide this by 2 so you can see how many monthly mortgage payments at you get 13.
     Some mortgage companies don’t have an easy way to take payments every 2 weeks. They just aren’t set up that way. Instead set up an extra savings account and transfer the money that you would send your mortgage company every two weeks into this account. Then use this money to pay your mortgage every month. You will put extra money in this account every month than your required mortgage payment, so make sure you send that extra money too. Don’t get sloppy or lazy with that extra money or you will defeat your purpose.
     You will have to make sure that the account you use to do this does not have any minimum monthly balance requirements, or you’ll have to put in a little extra money and leave it there so you don’t get charged any extra fees.
     3. Make an extra payment once a year. If you get an annual bonus at work or a big tax refund every year, this might just work for you. With this method of making an extra payment a year on your mortgage, there is no need to write two separate checks like you do in method 2 that we just discussed. You will just have to write one check every year.

What Kind Of Savings Can I Expect By Paying Extra On My Mortgage?
     Well this is a hard question to answer exactly because there are so many things to consider. Here are a few considerations: your loan balance, the length of time of your mortgage, your monthly income, the interest rate on your mortgage. But, to illustrate how it can work for you’re here is an example.
     Consider, if you have a 30-year, $200,000 mortgage at 6.75%, you would end up paying a total of $267,000 in mortgage interest alone over the course of the loan. I cannot go into all the math right here, but if you make 13 payments a year rather than 12, you will finish paying your mortgage off in about 24 years instead of 30. The interest you would pay is only $205,000. That’s $62,000 in savings!
In addition to paying less mortgage interest you’ll begin adding to your equity much quicker — which means you can get rid of private mortgage insurance in short time, you can make a lot more money if you sell the property, and you can get a more sizable home equity loan if you should ever need to.
     It is ridiculously simple to accelerate your mortgage payments, and it will save you a gaudy sum over the course of a couple decades. There is another form of mortgage acceleration which does not require any extra payments. See more about this in’s article: Mortgage Acceleration.
     Next time you get a solicitation from a company offering to help you save money on your mortgage by speeding up your payments, tell them “no thanks,” and do it yourself!