Existing mortgage payoff calculators work by indicating how much you save on interest and the length of a mortgage by paying extra each month, and it can tell you how much extra to pay each month to pay off a mortgage within a specific length of time, as BizCalcs.com explains. However, these methods assume the absence of a prepayment penalty, and the bank must be willing to apply the extra payment directly to the principal balance, as Bankrate details.Continue Reading
Paying extra on a mortgage payment each month can reduce the time and overall amount of money spent on the mortgage, according to Bankrate. One way to commit to these extra payments is to refinance into a 10-, 15- or 20-year mortgage. This requires a commitment to making larger monthly payments, but it guarantees a shorter length for the mortgage. To get the benefit of a mortgage with a shorter term without the risk, keep the mortgage with a longer term while making payments as though you had refinanced.
Another method to pay off the mortgage more quickly is to switch to a biweekly payment plan, which means making the equivalent of 13 monthly payments each year rather than 12, as Bankrate points out. Over time, this reduces the length of a 30-year mortgage by six years.Learn more about Credit & Lending