In this post, we gave you some ideas for how you can pay off your mortgage quickly. Our main focus was on techniques you could use such as making extra payments and rounding payments up. In this post, we are going to share a few general best practices with you for paying off your home loan early.

3 Best Practices for Paying Off a Mortgage

1. Put the money toward your principal, not the interest. Regardless of the method you are using to pay your mortgage off early, it is vital to make sure that the extra money you are sending the lender is being applied properly. You have to be explicit when you send the money. Write that it is only to be applied to your mortgage principal. Otherwise, it will go toward the interest. If you are not reducing your principal, the interest will just keep piling on, so the money is wasted. So long as you are specific, the lender will only be able to put the money toward the principal, so you can keep making progress toward paying off your mortgage.
2. Make sure you have an emergency fund. Some homeowners become overzealous about paying off their home loans as fast as possible. In the process, they end up putting every extra dollar towards their mortgages without thinking about other financial needs. You do not want your car to break down or an urgent medical bill to come up without the money to cover it. Make sure you have an emergency fund at all times so that you do not need to take out additional loans if something unexpected happens.
3. Consider investing. Something else that homeowners sometimes overlook when they are trying to pay off their mortgages quickly is that sometimes, it may be more profitable to hold some money in reserve for other purposes such as investing. It could well be that if you invest some of your extra money now instead of putting it toward your loan principal, your profits could end up exceeding the additional interest payments from paying off your mortgage more slowly. In that case, investing could be worth it.

The Grandview Lending Team is Here For You

We hope the recommendations we gave you above help you to pay off your mortgage early while keeping your finances in balance. If you want to learn more about paying off your mortgage, contact Grandview Lending at (317) 255-0062.