Five Ways to Pay Off Your Mortgage Loan Faster By AllBusiness.com

Most homeowners would love nothing more than not to have to put that mortgage check in the mail every month. But trying to pay off your mortgage ahead of schedule is not something to be undertaken lightly. You must make sure you are financially secure, with no other significant debt, and have money in reserve for emergencies. Learn to calculate your Debt to Income Ratio.
There are also compelling arguments for not paying off your mortgage ahead of schedule. If you are inclined to take some risks, you could invest the money instead. Your investment could conceivably earn enough money to offset the benefit of paying off the mortgage.
Or maybe you would just like to enjoy your money now. By allotting less of your income toward your mortgage, you have more money available for vacations and other uses. Or you could use the money for home improvement, which can make your home more comfortable and more valuable when you are ready to sell.
In your haste to be rid of your monthly mortgage burden, you cannot afford to mortgage your financial future. Make sure you will be able to finance your children's college education and your own retirement.
And finally, there's also the matter of the tax deduction that mortgage payments bring. Be sure to factor increased tax liability into your financial projections before you make your decision.
If you are in a debt-free financial position where you can pay off your mortgage more quickly without sacrificing other aspects of your life, there are a few ways to accomplish this. Naturally, you will have to consult your lender to see what you can and cannot do. Here are a few of the most popular options.
1. Increase your payment schedule. Biweekly mortgage payments have become increasingly popular as a way to pay off a mortgage more quickly.
2. Make lump sum payments. Depending on the terms of your mortgage agreement, you may be able to make lump-sum payments at specific times. For example, you could earmark your bonus check of $5,000 to pay off part of your mortgage.
3. Shorten the time frame of your loan. You could elect to refinance and change your 30-year mortgage to a 15-year mortgage. Bear in mind, though, that your monthly payments will be considerably higher.
4. Increase your payments. If your financial situation has improved and you are making more money, you may be able to make higher payments or balloon payments. Most loans will allow you to increase your payments in this manner with certain restrictions.
5. Refinance at a lower interest rate, but pay the same amount each month. If you maintain a 30-year mortgage, but the interest rate drops from 6.25 percent to 5.10 percent, the money you were paying in interest can now go toward the principal. Should You Refinance Your Mortgage Loan?
Remember, the first step is to make sure you can afford to pay off your mortgage more quickly. If you can, talk with your lender to find out which of these strategies is best for you.