mortgage

4 ways to pay off your mortgage early and calculate the savings

Make an extra mortgage payment every year
Make an extra mortgage payment every year | Roberto Westbrook/Getty Images

Make an extra mortgage payment every year

Make 13 payments in 12 months. There are a couple of ways to pull off this tactic. You can save up throughout the year and make an extra payment. Or, for those who get paid biweekly, harness part or all of those "extra" or "third" checks.

The equivalent of 13 payments a year will slice years from a new 30-year mortgage, Tyson says.

Let's say you got a 30-year mortgage for $200,000 at 4.5%, and you decided to add an extra 1/12th of a month's principal and interest to each monthly payment, starting the first month. Doing so pays off the mortgage 4 years and 4 months earlier, and saves more than $27,000 interest.

Minimum payments only
Monthly principal and interest, years 1-5$1,013.37
Years and months to pay off loan30 years
Interest rate4.5%
Total interest$164,813.42
Paying extra
Paying 1/12th extra principal and interest each month from the beginning$1,345.45
Years and months to pay off loan25 years, 8 months
Total interest$137,118.88
Your savings$27,694.54

Bankrate's mortgage calculator lets you see how much time you can shave off by making an extra payment each year. Click "Show Amortization Schedule."

RATE SEARCH: Shop today for a mortgage refinance.

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