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Is It Worth It To Pay Off Your Mortgage Early?

Paying off your mortgage early may be a good way of saving thousands of dollars in interest. Ultimately, it is a better idea, if you are looking to save money long term, to sign up for a 15 year mortgage versus a 30. For some, however, that can cause monthly payments to be too high, so it is not a feasible option. An alternate option could be increasing the amount that you pay each month by 100 dollars. This can save you money on interest and will put more equity into your house at a faster rate. Making your payments is very important to you credit score so it is a must that you make at least the monthly payment. If you are able to throw extra money towards your mortgage at any time it is always a good idea, that way you will not have to pay more in interest later on down the road. The more money that you are able to apply to the principle the better off you will be in the long run. Having large home loans hanging over your head can become stressful if your employment situation changes at all or you receive less income then usual. When a home loan is payed off you are in the clear and it is yours to do whatever you like with it. For most, a mortgage will be the largest loan they take out in their life and buying a home is one of the biggest investments they will make. The sooner that they have it payed of the better off they will be. Talk to your mortgage broker to learn more about paying off your mortgage early. It is rare, but some companies may charge penalties for paying off your mortgage early so make sure you understand all of the regulations and rules behind it. In cases where they charge penalties for paying off the loan early they are trying to make up for the money that they would have made, had you kept paying for the term of the loan. Interest on a mortgage can sometimes run more then the house over the length of the loan. If you have a 30 year mortgage for 200,000 dollars you might end up paying up to double that over the 30 year term. Paying off your mortgage early will never hurt you in the long run considering the money that you will be saving on the interest alone. Also by paying off your mortgage early your credit score will become better because it shows that you are able to pay off your loans and you are less risky to lend money to. When looking at the big picture the best thing for your financial well being is to pay off your mortgage early if you have the means to do so, but it isn't mandatory that you pay it off it will just help you out over time.
National Rate Averages

Mortgage Rates

Product Rate
5/1 yr ARM 3.147%
1 yr ARM 3.299%
15 yr fixed 3.221%
30 yr fixed 3.815%

Home Equity Rates

* Updated Jun 7, 2012