Taking a mortgage loan is the common way that homeowners take to help them buy their homes. A mortgage loan is the biggest investment you will make in your life, which makes handling mortgage debt as one of the most difficult and important financial decisions you’ll ever make.

Generally speaking, home loan terms can include 10, 15, 25, 30 or even up to 40 year loan terms. The American Financing team recently completed a ‘Retirement and Mortgages’ Survey, an in-depth study examining mortgage, retirement, and homeownership trends among 60- to 70-year-olds, it was found that 44% of homeowners bring their mortgage into retirement. And, 32% predict it will take them more than eight years to pay off. An additional 17% say they may possibly never pay it off.

Paying off the mortgage early must be one of the most significant part of the pre-retirement planning.

There are pros and cons of paying your mortgage early. If a borrower has excess amount of cash, it’s natural to want to pay off your mortgage as quickly as possible.

Paying off your mortgage early will surely help you to reduce the overall interest. You eliminate the added interests payment charged for the loan if you pay off the balance early. Paying off the mortgage in full also frees up cash flow for the family each month. This surely provide a financial freedom in the household. You could save for emergency situations, or better you can possibly invests. In the long run, having your mortgage paid off early will also help you save for your retirement.

Keep in mind that early repayment only makes sense if it allows you to save money and achieve your long-term financial goals.

While it is a good idea to payoff the mortgage loan early, there are also risks in using the free cash flow to pay off the mortgage. It’s important to have a cash on hand  to meet emergency expenses. Though you have your home equity to tap into, selling your home and accessing those funds may prove difficult. Also, you might missed out good investment opportunity if you focus on paying off your loan which offers the chance to earn returns beyond your mortgage rate.

What you need is a balance on how you can have financial freedom while paying off your loan early. Let me provide you simple ways on how you can payoff your mortgage faster:

  1. Amortization Schedule Calculator– So what is an amortization schedule? During a closing process of your mortgage, they will give you loan schedule which covers the  life of the loan. It lists every single payment, breaking down principal and interest. In order to take advantage of the amortization schedule, you can look at the bigger picture, plan ahead, in case you decided to increase your scheduled payment per month – you’ll see how your loan term will be shorten and how much interest rate have you saved up.
  2. Increase your monthly checks by one-twelfth – Another payment term you can try is increasing your monthly payment check by one-twelfth, again paying off additional money on the mortgage lowers the interest in the long run.
  3. Make one extra payment a year -Making an extra payment works if you have extra income per year such as annual bonus or receivable tax refund. Same as above, paying ahead of schedule lessen the interest.
  4. Biweekly Payment – How does this work? You can either save the money up on your bank account every two weeks then pay it up after a month if the lender does not accept partial payments or if your lender allows you to switch your payment terms on a biweekly basis at no charge, you can pay it up on a biweekly directly to them. For the computation, if you consistently pay biweekly throughout the year, it will be a total of 26 payments or 13 full monthly payment. There will be an extra one month payment – which surely shortens the length of the loan and reduces the total amount of interest you have to pay
  5. Change your W-4 forms, get less refund, and pay extra on their mortgage – What you can also do is you can change your W-4 forms by claiming more exemptions in order get a smaller refund and more take home pay. Then you can use your extra take home pay to increase your mortgage per month, which again helps you lower your interest and payoff your mortgage loan ahead.
  6. Refinance and keep paying the same payment – Refinancing a loan is a major move that can result in significant savings. Lending Tree is one of the refinancing company that operates an online lending exchange that connects consumers with multiple lenders, banks, and credit partners who compete for business.  You can refinance to lower your interest rate and if you keep on paying same payments, you’ll be able to finish your mortgage loan sooner.
  7. Utilize pay raises – As a hardworking homeowner, you can add your annual pay raise on your mortgage payment. This will assure you a shorter mortgage loan term and lower interest.

Once your mortgage is gone, you can start investing the amount you were supposed to be paying toward your mortgage every month. Cheers to financial freedom!