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How to Pay Off a Mortgage

Once you have a mortgage, the key to paying it off is simple: send money. Some mortgage plans offer a bimonthly payment schedule, which results in one extra payment per year. It's a great strategy, unless there is a fee associated with it. If there is, simply set aside some cash and make an extra payment on your own.

If your career advances over the years, put those raises and bonuses to work by sending them to the mortgage company. You were doing just fine without that money, and you won't miss it if you don't get used to having it in your budget.

Keep an eye on interest rates and, if they fall, consider refinancing. If you can reduce your interest rate, shorten the term of your loan or both, refinancing can be an excellent strategy. Just don't make the mistake of keeping your term the same and taking money out. (To learn more, see Mortgages: The ABCs Of Refinancing.)

The Bottom Line

There's no time like the present to begin your quest to pay off that mortgage. Start by reading your amortization schedule; once you see exactly how much of your monthly payment goes to interest, and what a tiny portion goes toward paying off the principal, you will realize that every extra dollar you send, reduces the portion of your payment that services your interest expense. That can be a powerful motivator, for financially savvy individuals.

If you focus your efforts on the task at hand, you may be surprised at how quickly you can retire a mortgage. With your mission accomplished, you will find that the comforts of home are even more pleasurable when it is you, not the bank, who owns the home. (For more information on mortgages, see Shopping for a Mortgage and Understanding Your Mortgage.)

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