Paying off mortgage early? Is it a good option?

One of the best feelings in the world is the moment that you make that last mortgage payment. If you have not given it much thought, here are some things to consider.

Benefits When You Pay Off Mortgage Early

• One Less Bill To Pay

Your mortgage is probably the largest payment that you make each month but once you pay it off, you no longer have to worry about it.

• More Money To Save

Once you pay your mortgage off, you can take that amount and stick it in the bank. Save for retirement, a dream vacation, college tuition for the kids, emergencies, renovation/home repairs, or loss of income.

• Security

Having your home paid off gives you an added sense of security, knowing that it wont be at risk if you should lose your income. While you still have to be concerned with the maintenance and taxes, you wont be facing foreclosure or lose your home if your income decreases.

• Pay Less For Your Home Over Time

Paying off your home early saves you money on the interest you would have paid if you had just paid it off on schedule. Your interest on a 30-year loan can actually add to the amount of your mortgage but by paying your mortgage off faster, you can save thousands of dollars.

• Credit Rises

Any time you pay off a large debt early, your credit rating rises. This can enable you to do other things such as purchase a second home, a vacation home, or buy that boat you want.

How to Pay Off Mortgage Early

The easiest way to lower your mortgage payment is to go through a refinancing process on your home which can reduce your interest rate and redefine the term of your mortgage as well as your overall payment. There are two options when it comes to refinancing rate and term refinance or a cash out refinance.

Pay More Each Month

One of the easiest ways to pay off your mortgage early is to simply pay more on it each month. Even if it is just $100 more a month, it adds up over time.

Refinance Your Home Loan

Another great way to pay off your mortgage is to refinance at a lower interest rate, which lowers your monthly payment. Once your payment is lower, continue paying the same amount you were paying before. This means you didn't increase the amount you spend per month, but you are putting more towards the principle on the house, paying it down quicker than you would have without refinancing.

Make Bi-Weekly Payments

Most people do not realize that they can change from a monthly payment to a bi-weekly payment. Pay half of your regular mortgage payment every two weeks and you actually will end up making an extra mortgage payment at the end of the year.

Thinking of Refinancing? Here Are Some Popular Loan Options

There are three loans that people tend to choose from most often when refinancing their home: 15-year fixed, FHA, and VA loan. Each of these loans has it's own benefits, drawbacks and requirements. If you are confused about any of these options or would like us to explain in more detail.

• 15-year fixed loan: This type of loan enables you to pay off your home in 15 years, saving you thousands of dollars in interest. The payments are higher than with a 30-year loan, but the interest rate is lower.
• FHA loan: An FHA loan is a loan that is insured by the Federal Housing Administration. These loans are designed to assist home owners with a lower income, work with fixed and adjustable rate loans, and are more flexible with their qualification guidelines.
• VA loans: This loan is for individuals who have served in the military. Similar to FHA loans, they more flexible in qualification guidelines and you can choose fixed or adjusted rate programs.