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If you've already paid off your consumer debt such as credit cards, car loans, and student loans, systematically paying off your home's mortgage early will provide you greater financial security and eventually more cash flow. Freeing up this extra cash flow can later help you with retirement and other investments.

There are some things you need to consider if you're in the stage of considering this:

1) Take a Look at the Terms of Your Current Mortgage.

If it has bad terms, such as an adjustable rate or high interest, you may want to explore refinancing if that's an option for you. Ideally you want a fixed-rate mortgage with a 15-year or shorter pay off. If you have a 30-year fixed but with a good interest rate, you can still add extra money to your principle each month so it pays off like a 15 year or sooner.

2) Have a Financial Foundation Before Paying Extra.

You need to make sure you have enough money in savings to serve as an emergency fund or buffer so you don't have to take the equity back out of your house for major emergencies. This is very important because you don't want a single bad situation wrecking a lot of progress.

3) Don't Ignore Your Retirement or College Funding For Your Children

You have to have balance since you want interest to work in your favor early for retirement and college funds for your children. Take some time figure out what is a right balance for you. There are many financial books out there that can help you with this, and read several to get a good overall picture for your individual situation.

4) Write the Extra Payments as a Separate Check and Indicate It's Toward the Principle of the Mortgage.

My parents ran into this when they were paying extra on their home. If you don't indicate on the extra check that the payment is for the principle, there are certain banks that will treat it as if you're paying early on a monthly payment.

A clearer example is suppose you normally have an $1000 normal mortgage payment for January, and you want to add another $500 to the principle. If you didn't indicate it on the check that the amount is "for principle," that extra $500 may just be placed on February instead and would be affected by interest.

5) Both Consistency and Persistence Help

Ideas that bring in extra money, such as yard sales and side businesses, can help give you a good start in paying more on the mortgage than the minimum. You may have to start small and work your way up, but that's okay. The important thing is developing a habit of it. There will be circumstances where extra money will come your way, and if you plan right you can put it to good use in your overall financial plan.

I hope these tips have been helpful to you! Best wishes to you and your soon to be paid off home!

Learn more about this author, Patricia Gilliam.
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