Paying Off a Mortgage Early
The News & Observer has an interesting story about a Pennsylvania home owner who completely paid off his mortgage in 1994, but found out recently that it still showed up as a lien in his county’s records. The poor guy has jumped through a lot of hoops trying to get the matter cleared up even though he has documentation that he paid off the mortgage loan.
Dealing with More Than One Mortgage Lender
What has complicated his efforts to get the case straightened out is that his loan was sold to another mortgage lender. The original mortgage lender said they don’t have records that go back far enough to show he paid off the mortgage.
The homeowner is still struggling to get closure, and his case is a reminder of some things you should do if you plan to pay off your home mortgage early.
Keep Careful Records
Anytime you communicate with your mortgage lender keep careful records of phone calls and mailings. Ask for the name of the individuals you speak with and find out if there is a case number associated with your call.
Pay Off Other Debts First
If you currently have a lot of credit card debt, it makes sense to pay that off first before prepaying on a mortgage. Also, work on building up an emergency savings fund and regularly contribute to a retirement account. Once you’ve accomplished that, direct extra cash to your mortgage.
Be sure to write a note with your payment that explains that you want the extra money applied to the principal. Make sure there is no penalty for prepaying your mortgage loan.
Make Extra Mortgage Payments
While most mortgage lenders offer to set up biweekly payment plans for a fee, you can do this on your own. Just pay half of your monthly mortgage payment every two weeks. This works out to one extra payment a year and reduces the time it takes to pay off your loan, as well as the total interest. Also, use any extra money you get from tax refunds, gifts, or refunds to put toward your mortgage.
Some people argue that it doesn’t make sense to pay off a mortgage loan early because you won’t be able to deduct the mortgage interest. Others say it’s better to keep your money more liquid instead of putting it into a house. But if you want the peace of mind that comes with owning a home free and clear, prepaying your mortgage could work for you.
Tags: home mortgage, mortgage, mortgage lender, mortgage loan
