In the landscape of personal finance, your mortgage may loom as the largest mountain to climb. The path to financial freedom makes eliminating the biggest debts a top priority. The strategy for an early payoff to a mortgage depends on how much self discipline you have. The statistics for how many actually succeed in paying extra on their mortgage every month may surprise you.

Early Pay Off

The short answer is to simply add an additional amount to your mortgage payment every month. You can determine how much the additional payment should be on a handy online calculator: http://www.lendersmark.org/calculators/what-if-i-pay-more-calculator.php. Use the "What if I Pay More Every Month?" calculator to determine exactly how much you need to add to your monthly payment.

Fill in the Details

To use the calculator, all you need to do is enter the original balance on your existing 30 year mortgage in the "Amount" field, then enter the fixed interest rate in the "Interest Rate" field. Assuming you are just beginning to make payments on your 30 year mortgage, enter "30" in the "Length" field. A good guideline to arrive at the additional payment amount needed is to multiply the original balance by .0025 and enter that amount in the "Additional payment" field. The precise percentage rate depends on the APR of your mortgage. Click the "Calculate" button to view the results in the "Financial Analysis" section. The amount you entered for the additional payment will be the amount you need to add to every mortgage payment for a 15 year payoff. If the length shows more than 15 years, or you have been paying on your 30 year mortgage for some time, and want to calculate a payoff term less than 15 years, add to the "Additional Payment" field until the desired payoff time if achieved. Check with the bank that holds your mortgage when you're ready to start making additional payments. Some institutions will have a special line on their coupon or on the electronic banking site on which you can indicate the amount of the extra payment. If your bank doesn't have provisions for paying your mortgage off in 15 years, send a separate check with your monthly payments for the additional amount. In the memo line on the check, write "Principal Only."

Lacking Discipline

According to financial expert Dave Ramsey, "Something will go wrong. Avoid 30-year mortgages...97.3 percent of people don't systematically pay extra on their mortgages." You will need to be among the 2.7 percent of people with extraordinary self-discipline to achieve the early payoff goal. If you feel you are too easily tempted by other financial needs that compete with your voluntary increased payments, you can always re-finance to a 15-year mortgage. The disadvantage to this option is the fees you will have to pay to write the new loan. The advantage may be the lower interest rate you can get for the shorter loan term and, most importantly, the fear of foreclosure if you don't make the required payments.

Source:

Lenders Mark: Paying Off Your Mortgage Early

Consumerism Commentary: Paying Off a 30-Year Fixed-Rate Mortgage in 15 Years

Dave Ramsey: The Truth About Mortgages