Question:

How to pay off a mortgage loan early?

Answer:

Are you really willing to pay off a mortgage loan early, or you are looking to cut monthly mortgage payments? Borrowers sometimes confuse the two concepts.

Paying off the home loan early can be accomplished in several ways:

  • Monthly prepayments to the principal;
  • Biweekly repayment plans;
  • One-time annual repayment.

Early mortgage payoff is different from monthly payment reduction.

Each of the abovementioned payment strategies effectively reduces the amortization term of the mortgage and the interest cost (IC) of the loan, but doesn't cut the monthly mortgage payment. If you are looking to reduce the monthly payment, you are mainly advised to refinance an existing loan to longer term and/or lower interest rate, or buy discount points at closing.

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Common misspellings: mortage and morgage