7 Painless Ways to Pay Off Your Mortgage Years Earlier

Want to pay off your home and run the mortgage contract through the shredder a lot sooner than you planned?

There are many ways to pay off your home loan faster. With the right tactics — like the following ones — you’ll scarcely notice the increase in your monthly payments.

1. Make mortgage payments every two weeks

gpointstudio / Shutterstock.com

Most homeowners make 12 monthly mortgage payments per year. But if you make half-sized payments every two weeks, you’ll make 26 half-payments per year — the equivalent of 13 full payments.

Essentially, it is like making 13 monthly payments every year rather than the usual 12.

To go this route, call your lender and ask the best way to do it. Some lenders will set you up with such payments. Or, you might simply prefer to send in the extra payments by mail or electronically.

Whenever you make any extra payment, however, be sure to designate it “apply to principal.” Otherwise, the lender may treat it as a prepayment of your next regular monthly payment.

According to one calculator, if you have a $200,000 mortgage with a fixed interest rate of 4.5 percent, making biweekly payments would save $28,037 in interest over the life of the loan and pay off your mortgage in 25.6 years instead of 30. That’s a big bang for not many extra bucks.

Caution: Avoid paying for “mortgage acceleration” programs. Paying down your mortgage faster should not cost extra.

2. Pour every bit of extra cash into your mortgage

kram9 / Shutterstock.com

Dedicate every windfall you receive — such as bonuses and gifts — toward your mortgage principal.

It’s possible you’ll find better uses for extra cash than paying down your mortgage, though. For example, if your after-tax mortgage interest rate is 4 percent, but you can earn 5 percent on your money elsewhere, you’re probably better off earning the 5 percent.

3. Round up your payments

Anant / Shutterstock.com

Get in the habit of rounding up your monthly payment. If it’s $1,013, pay $1,020 or even $1,100.

Do this on a regular basis, and you’ll shave years off your mortgage while feeling little pain.

4. Make one extra payment a year

Luba Shushpanova / Shutterstock.com

This is an alternative to making a payment every two weeks. At the end of the year, give yourself a holiday gift by making an extra payment. Heck, do it at any time.

Or, if you’d rather, just add an amount equal to one-twelfth of your mortgage payment to each month’s payment. For instance, with a $1,013 monthly payment, one-twelfth is about $84. So, you’d pay $1,097 monthly instead.

5. Refinance into a shorter loan

Alexander Raths / Shutterstock.com

Interest rates are generally lower on shorter-term loans than on longer-term loans. So, borrowers choosing shorter terms — such as a 15-year mortgage instead of a 30-year mortgage — can save a great deal of money in the long run, although their monthly payment will likely increase.

6. Refinance and pretend it’s a shorter loan

esfera / Shutterstock.com

If locking into a shorter mortgage with higher monthly payments feels scary, you can get much the same effect by refinancing into a cheaper 30-year mortgage but paying it off on a shorter schedule.

You won’t enjoy the lower rates offered for shorter-term loans, but you’ll still save heaps of money on interest.

This option requires willpower, because you’re making a larger payment than you are required to each month. But it gives you the option to fall back to your smaller required payment if you need extra cash.

7. Decide if refinancing is cost-effective

ESB Professional / Shutterstock.com

Options 5 and 6 involve refinancing your mortgage. Before considering those options, decide if refinancing is a good move for you.

Whether refinancing is worth it depends on the various associated costs, whether rates are low enough to justify a refinance and how long you’ll stay in the home. To be a good deal, you’ll need to stay long enough to more than recoup those costs.

You can get an idea of your costs using FICO’s mortgage refinance calculator. Also, you can shop around by telling several mortgage lenders how much you want to borrow and asking for their estimates of fees.

Tip: Don’t give lenders consent to pull your credit report until you’re ready to actually apply for a loan, as that can temporarily ding your credit score.

Are you trying to pay off your mortgage faster? If not, why? Tell us about your experience below or on Facebook.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
The 10 Best Outdoor Home Upgrades for Your Money
The 10 Best Outdoor Home Upgrades for Your Money

There’s still time this summer to make improvements to the exterior of your home. These offer the best payback.

7 Bank Accounts With Extra Perks for Seniors
7 Bank Accounts With Extra Perks for Seniors

These accounts offer exclusive discounts and other perks — including interest — to older customers.

7 Steps to Keep Your Car Looking Like New
7 Steps to Keep Your Car Looking Like New

Take a few steps to preserve the beauty of your car, and you stand to get a lot more money at trade-in time.

6 Ways to Guarantee Yourself a Steady Retirement Income
6 Ways to Guarantee Yourself a Steady Retirement Income

Saving is just one part of the retirement equation. Do this now to guarantee income in your golden years.

7 Things I Never Buy at Costco
7 Things I Never Buy at Costco

A bulk buy isn’t always the best buy.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

How to Buy Gas At Costco Without a Membership
How to Buy Gas At Costco Without a Membership

The warehouse club often has some of the cheapest gas in town. Here’s how you can get it as a nonmember.

10 Things to Stop Buying If You Want a Clutter-Free Home
10 Things to Stop Buying If You Want a Clutter-Free Home

If you like to keep things simple, avoid these purchases.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

Vacuums from this brand can last a half-century, if not longer — and they’re hot on the resale market.

A Simple Way to Silence Robocalls Today
A Simple Way to Silence Robocalls Today

A few steps can keep your phone from ringing when a spammer calls.

This Company Makes the Best Tires in America
This Company Makes the Best Tires in America

Driver satisfaction with tires is at an all-time high, but one brand stands out.

Can I Switch to Spousal Social Security Benefits When My Ex Dies?
Can I Switch to Spousal Social Security Benefits When My Ex Dies?

Knowing when to claim can help you maximize benefits.

36 Things That Will Be Obsolete Soon
36 Things That Will Be Obsolete Soon

The writing is on the wall for dozens of things we have grown up with.

This Health Issue Can Hint at Dementia Years in Advance
This Health Issue Can Hint at Dementia Years in Advance

One type of pain is especially associated with cognitive decline.

8 Things You Should Always Buy on Amazon
8 Things You Should Always Buy on Amazon

The giant retailer shines when it comes to these things, from basics to hard-to-find specialty goods.

8 Federal Income Tax Breaks for Homeowners
8 Federal Income Tax Breaks for Homeowners

Some of these deductions and credits are available to a wide swath of homeowners.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

17 Surprising Things You Can Sell for Extra Money
17 Surprising Things You Can Sell for Extra Money

You probably don’t realize these items are worth decent cash.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

5 Ways to Fill Your Pantry With Free Food
5 Ways to Fill Your Pantry With Free Food

Anyone can take advantage of these resources.

10 Types of Retirement Income That Are Not Taxable
10 Types of Retirement Income That Are Not Taxable

There are lots of things Uncle Sam can’t touch — so long as you play by the rules.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

10 Deep Discounts Available on Amazon This Friday
10 Deep Discounts Available on Amazon This Friday

These items are steeply discounted — but the deals won’t last long.

6 Reasons You Should Stop Hiding Cash at Home
6 Reasons You Should Stop Hiding Cash at Home

Stashing money around the house is anything but harmless.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.