Your mortgage payment stares you in the face every month, and you wonder about the fastest way to eliminate it.  Then you start daydreaming about all the things you could do if you didn’t have to hand that nice chunk of change over to anyone else—but it will be 30 years until you reach that point, right?  Not necessarily.  There are ways to shave some of that time away.

Biweekly Payments

One common method is to make biweekly payments instead of one monthly payment.  This will result in one extra yearly payment, cutting down the length of your loan by 6-8 years.  You’ll be paying half of your monthly payment every two weeks, so you may have to adjust the rest of your bill payments to make sure you stay ahead.  And you should speak with your lender to make sure that if you begin this plan, your first payment of the month will be immediately applied to your loan.  If your payment will instead be held until the other half is received, this may not be a worthwhile option for you.

Extra Payments to Principal

Most of your mortgage payment goes toward interest in the first few years of owning your home.  This will make it difficult to get a jump on paying off your loan early.  However, if you do send an extra payment, make sure to mark it specifically as an “extra payment toward principal” to prevent it from being applied to your interest.  Your caution here is to realize that in affecting how much interest you pay during the year, you will also be affecting your taxes since interest is tax-deductible.  Talk with your lender on this option to ensure that you won’t cause an unwelcome surprise during tax season.

Mortgage Accelerator

This method is fairly new to the US but has been popular in Australia and the UK for some time, according to www.moneycentral.msn.com.  This one is a little more complicated, involves some fine print, and you have to qualify for it.  The main idea is that you deposit your entire monthly (or biweekly) paycheck into an account tied directly to your mortgage.  In essence, you’re putting all of that money toward the loan.  So how do you pay for your other monthly expenses?  You’re given a line of credit that you can draw money against.  Of course, with this option, you can’t currently be spending more than you’re making.  Check out www.macquarie.com and www.cmgfs.com (CMG Financial Services) to learn the entire picture, read all of the fine print, and determine if you qualify.

What about the people that say they’ve paid off their mortgages in 5 or 10 years?  You’ll have to read the individual stories floating on the internet.  Many of them used much more aggressive strategies than the 3 listed above, applying every last cent toward their mortgage payments and “living like college students.”  If you’re not interested or able to be that aggressive but you do want to make extra payments somehow, simply create a budget and see where you can cut back.  You might want to skimp on certain little luxuries or even pick up a part-time job for extra cash.