- 1). Review an amortization table to see how principal and interest are broken down when payments are made. Amortization schedules provide a breakdown for every payment during the term of your loan. More of your payment goes toward interest at the beginning of the term and vice versa toward the end.
- 2). Determine when you want your mortgage paid off. If your mortgage is scheduled for 180 months, you may want to get it paid off in 120 months. A shorter term will save you money because you will pay less in finance charges.
- 3). Use a mortgage calculator (see Reference 1) to find the amount you will need to pay to pay off your mortgage debt in a shorter period. For this example, assume a mortgage has a balance of $75,000, interest rate of 6 percent, a term of 180 months, and monthly payments of $632.89. To pay off the mortgage debt in 120 months, (10 years), a payment of $832.65 will be needed. Entering all of the terms into a mortgage calculator will give you the payment you need to reduce the term.
- 4). Use a mortgage calculator to see the effects of a range of different extra payments. By adding an additional $50 per month to your payment of $632.89, you can reduce the term from 180 months (15 years) to 13 years. An extra $100 per month cuts the term to 12 years.
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