Mortgage Payoff

The Power of Extra Payments

Extra payments toward your mortgage apply directly to the principal balance, bypassing interest. This creates a snowball effect that significantly shortens your loan term.

Payoff Strategies

• Bi-weekly Payments: Making half-payments every two weeks results in 26 half-payments (13 full payments) per year, effectively making one extra payment annually.
• Round Up: Rounding up your monthly payment (e.g., $1,050 to $1,100) is a painless way to chip away at the principal.
• Windfalls: Applying tax refunds or bonuses directly to the mortgage.

Considerations

Before aggressively paying off your mortgage, ensure you have an emergency fund and are maxing out retirement accounts (like 401k/IRA), which often yield higher returns than your mortgage interest rate saves.