These Tips Will Help You Pay off Your Home Early

Thirty years can sound like a really long time, and that is because it is. Many consumers are not even thirty years old when they close on their first home. They are in essence assuming a debt that could last longer than the entire length of their life to that point. It can feel overwhelming and daunting.

For that reason, many homeowners want to focus on eliminating that debt more quickly. The thought of living for free or at least not having a payment on the place that you live sounds really appealing. If that is something that you are trying to achieve then here are a few tips to pay off your home early.

early home payoff

Biweekly vs Monthly

Every mortgage out there is setup to be paid one a month. So everyone in the country is making 12 mortgage payments each year or 360 payments for the life of the mortgage. But if you decide to pay your mortgage every two weeks then you are making 26 payments in a year, understanding that each two week payment is equal to half of the normal monthly payment. So when you do the math now, you are actually making 13 full payments each year. That extra payment each year might not seem like much when you are looking at three decades of payments but it is. Just divide those 360 payments by 13, and not the 12 that you were making a year, and you discover that you just shaved almost 5 years off of the term of your mortgage with the reduction in interest. And all that you did was write two checks a month or set up two electronic transfers. Even better than the time that you are cutting off of your mortgage, let’s look at what that means in real dollars and cents. For this example consider a mortgage of $200,000 at 5% interest for a term of 30 years. By making the bi-weekly payments you save over $34,000 in interest. That is well worth the time it took over the years to process the payments every two weeks.

Principal Only

When you make each month’s mortgage payment, you know that part of the money goes to the principal and part goes to the interest. The early years of your mortgage are spent paying mostly interest and very little principal. And that eventually turns around so that the majority of the payment is going to the principal. You can reduce the principal by sending in additional payments marked principal only. This will begin to shave months off of the length of your mortgage and help you to reduce the amount of interest you are paying. Another method of paying the principal down faster is to round up on each month’s payment. If your payment is $1050 then round it up to $1100, that $50 extra each month will add up to making over half of an extra payment each year.


Most homeowners chose a 30 year mortgage just because it is an easier amount to handle when you are getting into a new home. There are always numerous expenses and you want to be able to easily meet your mortgage payment each month. But if you find that in a few years you have extra money in the budget each month then you might want to consider refinancing. In general a 15 year mortgage will save you quite a bit on interest and if the 15 year mortgage payment is not twice as much as the 30 year mortgage payment then you are saving money. You will also notice that the shorter term mortgage generally offers a better interest rate than the longer term. Go online and pull up a mortgage calculator to see what type of payment you could expect by refinancing to a 15 year mortgage.

Use Your Good Fortune

Most consumers come across a windfall from time to time. This might come in the form of a winning lottery ticket, a bonus at work or selling an item that you no longer want or need. You might even consider a nice tax return a windfall even though it is money that was already earned by you and just being returned. Nonetheless, it is extra money that you don’t need to meet your budgetary bills. Putting that extra money into your mortgage will reduce your principal and the amount of interest you will be paying. Remember that any extra payments that you make in a year that add up to just one extra month’s mortgage payment is a huge help. If you can find a way to do that each year, then you will in essence be reducing your mortgage by 5 years just as if you were making the biweekly payments. Likewise, taking the money from a raise and adding it to your mortgage payment could easily add you to the amount of one extra payment a year. If you were living within your means before the raise then nothing changes except your mortgage being paid off a few years early.

Should You Pay Off Your Mortgage Early

Your mortgage is one of the few debts that offers a tax break on the interest. So if you have other debt such as credit cards or a personal loan at a high interest rate, then you are better off focusing on paying that debt off before your mortgage. If you have no other debt that is accruing interest then by all means pay off your mortgage early, but be sure that you also have an emergency fund that can cover a few months’ bills just in case the worst happens. The American Dream is to own your own home and many homeowners want to actually own it outright as quickly as possible. There are many great tips that can help you to pay off your home early. You simply need to set that goal and remain committed to working towards it. It might not sound like a big deal to pay off a house five years early but think of it as saving over $30,000 and it becomes much more impressive.

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