How to Pay Off a Mortgage in Less than 10 Years
Who wouldn't want to pay off a mortgage in under 10 years? Just think, your home completely paid for and that monthly mortgage payment is freed up for whatever you'd like to spend it on. Plus, if your home were paid for, you wouldn't be giving the current banking troubles a second thought.
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Instructions
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Commit to paying off a mortgage. Before you can even get started on any of the other steps, you must commit. It might seem a little weird to decide you're going to do something before you know how you'll do it, but in this case, you can't pay off a mortgage before committing to the process. If you're not the only one who needs to get on board with this decision, make sure you get the commitment of anyone else who's involved too like a spouse or partner.
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Get in touch with your bank to find out if they have any special programs to help you pay off early mortgage. Some banks do and some don't, but if yours does, this can be a big help in the process. It may have a two-week program where is automatically deducts your payment every two weeks instead of monthly, which means you'll wind up paying one extra payment a year. That's just a small amount, but it'll cut the length of your mortgage down by approximately seven years.
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Play with the online mortgage principal calculators to find out the different amounts it would take for paying off a mortgage. For instance, if you upped your payment by $100 a month, what difference would that make in the life of your loan? Because each loan is different by amount, term and interest rate, it's important to use an online calculator.
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Take a look at your monthly mortgage statement from the lender. See how much your monthly principal payment is. If you get in the habit of just paying that amount to the lender each month plus the regular monthly payment, you can easily cut the length of your loan in half or more.
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Using the online mortgage calculator, determine how much you'll need to pay in an annual pre-payment lump sum to get your mortgage down to 10 years or less. Most banks let you pay up to 10 percent of the total in this way, but check with yours before sending in the check. Then, combined with your monthly principal extra payments where, each month, you send a check for your payment amount plus next month's principal payment, you'll easily pay off a mortgage in 10 years or less.
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Tips & Warnings
Check to see if your bank has any pre-payment penalties and negotiate these before paying off a mortgage. Even if you don't have any extra money, set up the every-two-week payment plan. If you get paid every two weeks, this can actually leave you with more money and will probably help you worry about money a lot less. Though this alone won't pay off a mortgage in 10 years or less, it will save you a lot in interest. Consider getting a second job or looking for ways to make extra money and apply all of that money to pay off a mortgage. That can make a huge difference in how quickly your house is paid for.
