mortgage

4 ways to pay off your mortgage earlier

Refinance with a shorter-term mortgage
Refinance with a shorter-term mortgage

You can refinance into a mortgage for 10, 15 or 20 years, but 15-year mortgages are the most common. Your payments will be higher on a 15-year loan, but perhaps not as high as you think.

One advantage of a 15-year loan is that you're committed to the higher payment. There's no dithering about whether you can afford to pay extra this month.

With a 30-year, $100,000 loan at 5 percent, your principal and interest payments are $537. At the same rate, but on a 15-year payoff schedule, your principal and interest payments are $791. That's $254 more a month.

To get the effect of a shorter-term mortgage without the risk, take out a 30-year loan, but make payments as if you had a 10- or 15-year loan. "You just make increased payments. You're in control, not the bank," Piercy says.

Bankrate.com's 15- or 30-year mortgage calculator recommends which type of loan to get.

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
MORTGAGE & REAL ESTATE NEWSLETTER

Timely market news and advice for consumers ready to buy, sell or invest in real estate. Delivered weekly.

Blog

Holden Lewis

Will the last homeowner please turn out the lights?

The homeownership rate keeps sinking. Now it's at its lowest level since 1994.  ... Read more

advertisement
Partner Center
advertisement

Connect with us