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My mom currently owes approximately 65,000 on a house with monthly minimum payments of $ 795 with an interest rate of 6.5% Is there a way to reduce the term on the loan? She literally has $ 20,000 sitting in her bank.

Her husband is getting to retire in about four years. What are her best options for paying off the mortgage as soon as possible.
Any idea on what the penalties will be for paying it off early.

4 Thoughts on Can you lower your mortgage term?
  1. Reply
    Steve D
    February 9, 2014 at 6:03 am

    If she is looking to get rid of the mortgage, your parents need to pay as much as they can each month until the balance is paid off. If they are looking for lower payments, then they should be looking into re-financing the mortgage at a lower interest rate, and possibly back out to a 20 or 30 year term. They could also do both – refinance into a 10 year loan at a lower interest rate and then pay as much as they can each month (paying extra on the principal) to pay the loan off sooner.

  2. Reply
    I Like Turtles
    February 9, 2014 at 6:58 am

    Here are some options:
    – With today’s interest rates she could get as low as a 2.25% mortgage at a short term, let’s say 7 years with a payment of $ 837 per month. (see link below for a mortgage calculator)
    – Take $ 10,000 of the $ 20,000 and pay down the mortgage (be sure to do this on a check separate from the mortgage payment and write on the front memo and back signature area “apply to principle only” and then pay $ 100 a month extra. Again that will still require at least 7-8 years to pay it off. I think it’s important to keep some cash.

  3. Reply
    Classy Granny
    February 9, 2014 at 7:11 am

    There shouldn’t be any penalty for paying off early. She might get a better rate than 6.5% by refinancing. I don’t recommend using all of the 20,000. You can shorten the term by paying a little extra every month

  4. Reply
    February 9, 2014 at 7:37 am

    She would need to refinance, hopefully into a lower rate and definately a shorter term.

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