Mortgage Payoff Guide
Making extra mortgage payments can save you tens of thousands of dollars in interest and help you pay off your home years earlier.
Benefits of Extra Payments
- Interest Savings: Reduce the total interest paid over the life of the loan
- Equity Building: Build home equity faster
- Peace of Mind: Own your home outright sooner
- Investment Freedom: Free up money for other investments once paid off
Extra Payment Strategies
- Fixed Extra Amount: Add the same amount to each payment
- Annual Windfall: Use tax refunds or bonuses for extra payments
- Bi-weekly Payments: Pay half your monthly payment every two weeks (26 payments = 13 monthly payments)
- Round Up Payments: Round up your payment to the nearest $50 or $100
When to Consider Extra Payments
- High Interest Rate: If your mortgage rate is above 4-5%
- Stable Income: When you have consistent extra cash flow
- Emergency Fund Complete: After building a 3-6 month emergency fund
- No High-Interest Debt: After paying off credit cards and other high-interest debt
Important: Consider your complete financial picture before making extra payments. Sometimes investing the extra money in retirement accounts or paying off higher-interest debt may provide better returns.