How to Pay Down Your Mortgage

Your mortgage is by far your largest financial debt. Over the life of the loan, you'll have paid many thousands of dollars in interest alone.
The sooner you pay down your mortgage the sooner you'll be able to retire, travel or generally enjoy more of life. Learn how pay down your mortgage fast, cut years off the loan and save lots of money.

Things You'll Need

• money
• patience
• diligence

Instructions

1. Lower your principal.
   That's the ultimate goal when you're trying to pay down your mortgage. The interest you pay every month is calculated based on your outstanding principal. This means that if you can reduce your mortgage principal you'll pay off the loan sooner and save money on the interest payments.

2. 

   Utilize a bi-monthly payment program.
   By dividing your monthly mortgage payment in half and making a payment every other week, you'll make one full EXTRA mortgage payment every year. And that entire payment gets paid to your principal.

   This happens because there are 52 weeks in a year, not 48. Forty-eight is 4 weeks per month times 12 months. So, the four additional weeks is like having a 13th month in the year.

   When you make bi-weekly payments on your mortgage you take advantage of those "extra" weeks in the year and make 13 monthly payments each year.

   The step alone can cut almost five years off the life of your mortgage.

3. 

   Make a lump sum payment to principal.
   If you're lucky enough to have some extra cash lying around, use it to pay down your mortgage. This is called a "one-time payment to principal". It just means that it's not part of your recurring monthly payment. The entire amount gets applied to the loan principal.

   This is great for a couple of reasons:
   -- it's instant equity. By lowering the amount you owe you increase your equity.
   -- your monthly interest adjusts. Your interest rate and your monthly payment amount stay the same, but you pay less in interest and more towards the principal each month. Thus speeding up your pay off schedule

   This can cut years off the life of your loan.

4. Over pay every month.
   Every dollar that you overpay each month gets applied directly to the principal of your mortgage.

   Even if you overpay by $10 you'll cut time off the life of your mortgage.

5. 

   Use a credit card rewards program that uses your rebate to pay down your mortgage.
   Typically, the rebate is 1%. This means that for every $1,000 you spend on your credit card you get $10 paid towards the principal of your mortgage. Usually, the rebate is paid every time you reach a $2500 threshold.

   If you run your daily expenses through this credit card and pay the bill every month, you can pay down your mortgage in less time and save money.

6. Incorporate all the steps together.
   Anything and everything that lowers that principal will save you money and cut years off your mortgage.

Tips & Warnings

• be diligent and consistent. You won't see instant results but over time your principal will shrink

• a "one-time payment to principal" does not mean you can skip your regular monthly payment that month.

• Over paying does not carry over to the next month like many car loans. You must make the full monthly payment amount EVERY month.