Early Mortgage Payoff Saves Money

Added January 19, 2009 by Ilyce R. Glink

Print Articles

Summary: Paying off your mortgage early can save you money, especially when you refinance to a mortgage loan with a shorter duration and lower interest rate. Many homeowners dream of an early mortgage payoff. What's the best way to find a good deal on a mortgage refinance for an early mortgage payoff? Should you consult multiple mortgage brokers or lenders for the mortgage refinance that will enable you to do an early mortgage payoff?

Q: I currently have 25 years left on a 30-year fixed rate mortgage for my primary residence. My rate is 5.5 percent. With the interest rates dropping, I thought it might be wise to try and land a 20-year mortgage at a lower rate.

The concept is I'd save money and pay off the house 5 years earlier. What would the interest rate have to be for this plan to make sense? I'm guessing $2,000 for closing costs and there will be no problem with the house appraising out in value.

A: I'd love to be able to shave 5 years off of my home loan and pay less in interest along the way, so your plan sounds good to me.

As we went to press, some lenders were quoting in the upper 4 percent range for a 20-year mortgage (they're priced similarly to 15-year loans). Ideally, you'll limit your closing costs to an amount you can "pay off" in 6 to 8 months with the savings you'll glean from your lower interest rate.

But you won't know what's out there until you start shopping around. Talk to a bunch of different lenders (big, small, online, mortgage broker) to see what kind of deal you can get.

Jan. 19, 2009.

See more articles on this topic by clicking on the "RELATED ARTICLES" above and to the right.

We have over 5000 articles on Real Estate Advice, Personal Finance Advice and Consumer Advice on our site. We encourage you to look at these articles. As always, if you have a comment on our articles, don't forget to post your comment below. We thank you for coming to ThinkGlink.com.

© Ilyce R. Glink. All rights reserved. This content may not be used, distributed, syndicated, compiled or excerpted in any medium or form without written authorization from Think Glink, Inc. For information on syndicating ThinkGlink.com please contact us.

Previous article Next article