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Early Pay-Off Tips

by Jill Santandrea, Broker Manager, EXIT Homestead Realty Professionals

Only 34 percent of Americans own their homes free and clear. That means 66 percent of homeowners have a mortgage they’re chipping away at. Your home is a major source of wealth that allows you to build equity over time. A goal for many homeowners is to pay off their mortgage before the end of the amortization period; however, they may not know how to do it. Paying off your mortgage not only allows you to own your home sooner, it also helps you save money in interest.

Before you begin, you should know that some states allow lenders to implement prepayment penalties, which means it could actually cost you more to pay off your mortgage early. Regulations vary per situation, so before you proceed, find out from your lender if you’d face a prepayment penalty on your mortgage.

• If there is a penalty, decide if it’s worth it to you. Fines are typically a percentage of the mortgage itself. Carefully evaluate the risk versus reward before committing.

• If there is no penalty, start chipping away at your principal as soon as you can. The first five years is the best time to make additional payments toward your principal.

Let’s break down the mortgage math with these seven common-sense tips for paying off your mortgage early:

1. Bi-weekly payment plan. Pay half your monthly payment every two weeks. Some months will have an additional payment, this could add up to an extra full payment per year.

2. Matching principal payment plan. Add your initial principal payment to every monthly payment that follows. This shaves years off your mortgage and saves interest.

3. Make an extra full payment per quarter. In some cases, this can take up to 11 years off your mortgage.

4. Cash influx. Put unexpected cash—an inheritance, birthday gift, tax refund, etc.—toward your principal balance.

5. Refinance to a 15-year loan. This is helpful if you’re on track to pay it off early, rates are low, and you’re early in the mortgage. Consult your mortgage professional if you’re not sure.

6. Divide your mortgage payment by 12. Add this amount to your monthly payment and make one extra payment per year.

7. Do what you can. Make small budget cuts and save money to contribute toward your principal.

If you want to learn more about these best practices, talk to a mortgage professional—call me for a great referral! I’ll leave you with these inspirational words from Brian Buffini: “The one thing about real estate is if you hold it long enough, you will win” and “If you need a place to live, you may as well turn it into something that works for you.” Until next week…

Jill Santandrea, Broker Manager, EXIT Homestead Realty Professionals LLC, 1070 E Chestnut Ave, Vineland, NJ 08360; 856-692-EXIT; Cell: 856-362-0967; Direct: 888-856-5455;; E-mail:;  Text JillS to 85377 for my mobile business card. Listen to Jill on 99.9FM SNJ Radio Today. Source: 2019 Buffini & Company