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Easy Ways to Pay off Your Mortgage Early

May 11, 2012

Paying off the mortgage early is in. Refinancing to take money out of our homes is out. Living through the foreclosure crisis, more people want the security and the psychological benefit of owning their home free and clear. If you want to pay off your mortgage early, you’ll find plenty of experts recommending ways to do it. All strategies work, but you’ll find some methods of paying off your mortgage are safer, faster, and more painless than others.

Compare these ways you can pay off your mortgage early, starting with the simplest and moving toward the most complex.

If you want to see magic, start playing with mortgage calculators and see how adding a little payment to your principal here and there can shorten the length of your loan. You can use mortgage loan calculator’s to see how even $100 or any other amount added to your payment reduces your interest and shortens the length of your loan. If you pay a little more principal, you get a bonus. The lower your principal gets, the more every payment from then on is applied to principal, as less goes to cover interest expense.

If nothing else, round your payments up, recommends Tracy Piercy, CFP and CEO of MoneyMinding.com. She says that when people have a payment for $644, they think of it as $650. Why not just pay $650, then? An extra $6 a month on a $200,000, 30-year loan can save you four payments at the end of the mortgage loan. When you pay extra, make sure the extra is applied to the principal balance, not just set aside for the next payment. And before you make extra payments, read your contract and make sure you won’t have to pay prepayment penalties.

You can refinance into a mortgage for 10, 15 or 20 years, but 15-year mortgages are the most common. Your payments will be higher on a 15-year loan, but perhaps not as high as you think.
One advantage of a 15-year loan is that you’re committed to the higher payment. There’s no dithering about whether you can afford to pay extra this month. With a 30-year, $100,000 loan at 5 percent, your principal and interest payments are $537. At the same rate, but on a 15-year payoff schedule, your principal and interest payments are $791. That’s $254 more a month. To get the effect of a shorter-term mortgage without the risk, take out a 30-year loan, but make payments as if you had a 10- or 15-year loan. “You just make increased payments. You’re in control, not the bank,” Piercy says.

Biweekly payments take advantage of the fact that there are 52 weeks in the year and 12 months. If you pay half your regular mortgage payment every other week, you’ll have made 26 half-payments, or the equivalent of 13 full monthly payments, at year’s end.

SOURCE:

Bankrate.com

FOR A FAST PRE-APPROVAL:

http://pmcmortgageloans.com/mortgage_application.php

First, complete a loan application on our website
-Go to http://www.platinummortgagecompany.com
-Click on Apply Now at the top
-Scroll to the middle of the page and Click on 3. Full Application

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