How to Repay a Home Loan

Paying off your loan early will save you thousands of dollars in interest.

Repaying a home loan in full is a truly satisfying feeling. Through the life of a loan most homeowners will end up paying hundreds of thousands of dollars in interest alone. Making that final payment means the bank will be taken off your homeowner's title and you are not burdened with any more large monthly payments for your property.



Choose among different ways to pay off your loan. Having a 30-year mortgage doesn't mean you have to wait the entire 30 years. There are some simple things that you can do which will shorten the duration of your mortgage as well as save you thousands of dollars.

Instructions

1. Make bi-weekly mortgage payments. Send in half of your mortgage payment every two weeks. By doing this you will actually end up making 13 months of payments in 12 months. This will shave years from your mortgage and thousands of dollars in interest.

2. Send in an extra payment when you receive your tax refund.

3. Plan to have an annual garage sale. Use the money earned to help pay your loan down.

4. Send in any extra money that you receive. Whether it's money from selling items on eBay to getting a Christmas bonus, plan on forwarding it to help pay your home loan off.

5. Refinance your loan to a lower rate or a shorter term. Shorter-term loans generally have lower interest rates and will save you thousands of dollars, even if you have to pay closing costs. Fifteen-, 20- and 25-year loans are available. Larger payments will apply more money to your principal.

Tips & Warnings

• Check to see if you have any early prepayment penalty fees.

• Always send your payment in before the due date to avoid late payment fees and a lower credit score.

References

• Michael Blujay: Paying off a 30-Year Loan in 15 Years
• Loan: Can You Pay Off Mortgages Early?
• Michael Bluejay: How to Buy a House--The Loan