When you pay your mortgage as scheduled you pay a very small amount to the principle amount each month. The rest goes to interest, taxes, insurance and most likely mortgage insurance. You can accelerate the payoff by simply paying a little extra on your mortgage each month.
If you look at an amortization schedule for your loan, you will see that the first several years very little goes to principle reduction. If for example the principle is reduced at approximately $80 a month and you add even an extra $20 a month to your payment, then you are making a full extra principle payment approximately every four months. That is like reducing the loan by 3 payments in a year. Can you see how over time this could shorten the length of the loan and give you more equity when you sell. If you can pay more, then it is going to get paid off even faster.
I always suggest to my clients to round-up the mortgage to the next hundred dollars. So if the mortgage payment is $762, go ahead and pay $800 a month. Just make sure you mark the extra payment to principle only. If you are paying online, there is usually a box to mark and add the extra dollars. If you are writing a check, you might consider 2 separate checks–one for the monthly required payment and one marked principle only.
By paying off your mortgage faster you will actually own your own home and not the lender, pay less interest, and have equity faster in the home.
I guess the downside of paying off the house is that you will have to forego the mortgage interest deduction. But personally in an economy of uncertainty I would rather know that my house is paid for and I have a place to love. I like knowing that the house is mine and I just have to pay the taxes and insurance. In addition, the mortgage interest deduction is only a percentage of the interest, therefore you keep more cash in your pocket by not paying the interest.
If you would like more information regarding homeownership, buying or selling real estate please feel free to call me at 405-213-2992 or visit my website www.sandiwalker.com