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Photographee.eu/Adobe Stock October 18, 2022 Checkmark Bankrate logo How is this page expert verified? At Bankrate, we take the accuracy of our content seriously. "Expert verified" means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced. Their reviews hold us accountable for publishing high-quality and trustworthy content. Ruben Çağınalp is an associate writer for Bankrate, focusing on mortgage topics. Suzanne De Vita is the mortgage editor for Bankrate, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters. Kenneth Chavis IV is a senior wealth manager who provides comprehensive financial planning, investment management and tax planning services to business owners, equity compensated executives, engineers, medical doctors and entertainers. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our mortgage reporters and editors focus on the points consumers care about most — the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more — so you can feel confident when you make decisions as a homebuyer and a homeowner. Bankrate logo Editorial integrity
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Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Some homeowners are eager to get out of their mortgage early, with reasons ranging from eliminating the psychological pressure of debt to slashing interest payments. For retirees, paying off a home loan early can help increase cash flow. This is especially beneficial when transitioning to a fixed income. Whatever your motivation, paying down your mortgage ahead of time reduces the amount of interest you pay on the loan. This can be a substantial savings. Here are some strategies to help you achieve that goal. 5 ways to pay off your mortgage early
1 Make extra payments
There are two ways you can make extra mortgage payments to accelerate the payoff process: 2 Refinance your mortgage
Refinancing your mortgage to pay it off early only makes sense if you can get a lower interest rate or shorten the loan term. Refinancing into a shorter-term loan, such as switching from a 30-year mortgage to a 15-year mortgage, can also help bring down your interest rate while putting you on the path to early payoff. You can use Bankrate’s to compare payments and total interest between 30-year and 15-year terms. 3 Make lump-sum payments toward your principal
4 Recast your mortgage
is different from refinancing because you keep your existing loan, pay a lump sum toward the principal and your lender then adjusts your to reflect the new balance. This will result in a Plus, if you have a low interest rate, you get to keep it. On the flip side, if you have a high interest rate, refinancing might be a better option. 5 Get a loan modification
Can you pay off your mortgage early
In most cases, you can pay your mortgage off early without penalty — but there are a few things to keep in mind before you do. First, reach out to your loan servicer to find out if your mortgage has a . If it does, you’ll have to pay an additional fee if you pay your loan off ahead of schedule. This can affect whether paying your mortgage off early is financially viable for you. Second, make sure there aren’t any restrictions on how and when you can make additional payments. Some loans have terms that encourage you to follow the payment schedule, and it’s important to ensure that whatever extra payment you make goes to the principal and not interest. Should you pay off your mortgage early
Whether you should pay your mortgage off early depends on many factors, including the interest rate of your current loan and your personal risk tolerance. Start by considering the opportunity cost. If you repay your mortgage ahead of schedule, you’re putting money into the mortgage when you could have used those funds for other financial priorities. You’ll save on interest, of course, but if you invested the extra payments elsewhere instead of putting them toward your mortgage, you might find you’d have earned a higher return. On the other hand, if you know you’re likely to spend that extra money if you don’t put it toward your mortgage, making additional payments can be a good idea. The peace of mind that you get from owning your home mortgage-free can also be worthwhile, and is important to consider. Also, think about how much cash you have available for emergencies. You don’t want to tie all of your money up in your home and have no way to access it quickly if you encounter a crisis. Ultimately, with mortgage rates still low, it’s generally better in the long run to hold a mortgage with a low rate now and to invest your extra cash. Still, you can check Bankrate’s to see how much you can save by settling your mortgage early if you’re set on doing so. FAQ about early mortgage repayment
What are the drawbacks of paying off my mortgage early
Is it a good idea to make lump-sum payments on my mortgage
What happens when I pay off my mortgage
SHARE: Ruben Çağınalp is an associate writer for Bankrate, focusing on mortgage topics. Suzanne De Vita is the mortgage editor for Bankrate, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters. Kenneth Chavis IV is a senior wealth manager who provides comprehensive financial planning, investment management and tax planning services to business owners, equity compensated executives, engineers, medical doctors and entertainers.