Hi – What is the best way to pay off my mortgage early? I currently have a 30 year fixed at appx 4.1% and have appx 25 years left. I also pay $200 a month over my current payment. Thanks.
Terry Says: Well, you’re making a good start at paying it off early by adding the extra amount every month. Just make sure the lender is crediting that extra payment toward principal, not interest. And I would suggest getting a new amortization schedule from the lender or servicer to make sure that is what they are doing with your extra money. It will tell you how much time you are cutting off your payments, and how much interest you are saving along the way.
If you’re really anxious to pay it off, you could refi to a much lower rate (perhaps as low as 3 percent, depending on your equity in the home and your credit score) by going to a 15-year fixed rate mortgage. That wouldn’t lower your required monthly payment, (it might increase it slightly) but if you can afford the monthly payment you would save a small fortune in interest!