How To Pay Off Mortgage Early

Some extra or additional payments on loan can pay off mortgage early. There are three avenues to pay off mortgage early without paying a penalty. The borrower can use bi-weekly mortgage repayment, lump sum mortgage satisfaction, or additional promissory note payment.

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The terms and conditions of your home loan will tell you how much you can pay extra or additional without paying a penalty. The mortgagor or borrower pays a penalty when the extra or additional payment is greater than the limitations. Your collateral is an asset to mortgage lender. Since the loan lender losses interest as you pay extra or additional over the limitations, the mortgage lender charges a penalty to the mortgagor or debtor.

In bi-weekly mortgage payment, the debtor pays off the mortgage every two weeks. This option is the most affordable and expedient way to pay off the loan sooner from the three options to pay off mortgage early. For the annual lump sum and additional mortgage payment, the debtor needs to come up with larger funds. The mortgagor makes twelve payments on regular monthly mortgage payment, while the borrower makes twenty six payments on bi-weekly mortgage payment. Since the borrower makes more payment, the borrower put more money to reduce the mortgage. To calculate the bi-weekly mortgage payment, you simply divide the mortgage monthly payment by two. For example, the borrower pays $1,000 monthly mortgage payment. The borrower pays $500 ($1,000 monthly mortgage payment / 2) in bi-weekly mortgage payment. Another example, the mortgagor took $100,000 capital, 6.5% interest rate, and 30 year loan. The borrower pays $316 bi-weekly mortgage payment ($632 monthly mortgage payment / 2) to pay off mortgage early. The borrower saves 5 years and 11 months.

The annual lump sum mortgage payment is one large extra or additional loan payment every year. Mortgage lender usually allow up to fifteen percent of the principal amount which is the outstanding balance of the mortgage. For example, the borrower took $100,000 principal, 6.5% interest rate, and 30 year mortgage. The mortgagor pays $632 monthly mortgage payment. At the anniversary date of the following year, the borrower pays an extra payment of $15,000 ($100,000 x 15%) to pay off mortgage early. The debtor saves 5 years and 7 months.

The additional mortgage payments act like annual lump sum payment. The only difference is the borrower pays additional sum of money on top of regular mortgage payment on regular basis. For example, the mortgagor took $100,000 principal, 6.5% interest rate, and 30 year mortgage. The borrower pays $632 monthly mortgage payment. At the anniversary date of the following year, the borrower pays an extra payment of $500 on top of $632 monthly mortgage payment for 12 months. So, the borrower pays $1,132 per month. The borrower saves 10 years and 11 months.

Most borrowers dream to fully own the property by paying off the secured loan. Without a loan payment to worry about, the borrower gets personal peace and financial freedom. And, it allows the homeowners to save for their retirement. The money goes to savings, or investments instead of loan interest.

United First Financial and the Money Merge Account make it possible for a home owner to pay off their mortgage in a fraction of the normal time. There is no refinancing of the original mortgage and little if any change in lifestyle.

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Pay off your mortgage early with the Money Merge Account