The Benefits of Paying Off Your Mortgage Early

There are a lot of benefits to paying off your mortgage early. First of all, it removes a significant monthly fee, giving you more financial flexibility and budget space for other financial objectives. Second, it lowers interest rates overall, which might save you hundreds of dollars over the course of the loan. Thirdly, knowing that you are free from long-term debt obligations gives you peace of mind. Fourthly, it improves your net worth and stability financially because a mortgage-free house builds equity and can be a valuable addition to your portfolio. Not having a mortgage will also potentially improve your loan conditions or interest rate when you need to borrow money in the future because your credit will be stronger and your debt-to-income ratio will be lower.

How to Get Started

Figure out what your interest rate, loan term, and remaining balance are. Then look at your budget and see what costs you currently have. See if there are any expenses you can cut or you have any extra money coming in that you can set aside to gradually pay off your mortgage faster.

Decide what timeline you would like to have. For example, if you have a thirty year mortgage but you want to pay it off in 20 years, figure out how many more payments you will need to make in order to do so. Nerdwallet and Bankrate both have mortgage calculators that can show you how extra payments will help you pay off your mortgage faster. You could make extra monthly payments, biweekly payments, or a lump sum payment. You could also round up each payment or use something like a bonus or tax refund to help pay toward it. Even little payments over time can add up to chip away at the principal and get rid of some of that interest.

Regularly check up on your mortgage to see what progress you have made and how you can tweak it to save even more.