[foxpaws]

If your mortgage is at the low end of the interest scale - why? At this point it is cheap money - my interest rate is less than 3% - even compounded I will make far more in investing in a decent mutual fund (most mutual funds return in the 8% to 10% range over the course of 10+ years) than I would save on interest by making an extra payment each year. I know that at a mortgage rate of about 6.5% you cut 6 years of your mortgage if you add a payment each year - that declines as the interest rate gets smaller.

Original mortgage amount: $200,000
Interest rate: 6.5 percent
Term: 30 years
Monthly payment: $1264
Total interest paid on your loan: $255,088.98
How much you will really pay in full at the end of your term: $455,088.98

Original mortgage amount: $200,000
Interest rate: 6.5 percent
Term: 30 years
Monthly payment: $1264
Additional payment per year of: $1264
Total interest paid: $199,098.92
Total cost of your loan when paid in full: $399,098.92
Pay off date of the loan is reduced by: 6 years

You have saved $55990

Say, instead, you put $105 a month into a mutual fund (yearly investment $1260) - in 24 years you would have $91,000 at an 8% yearly gain - you could pay off your loan and have almost $35,000 left over. Or even if you go more conservative - say 6% return on your money (a decent deferred annuity will give you that) - at the end of 24 years you would have $67,320, again, pay off your note and pocket the $12,000. What if that mutual fund returns near the high side - say 9.5% - at the end of 24 years - $115,000, you get to pocket almost $59,000.

You should do lots of things, check with your tax lawyer (you might want that full interest payment on your home for a tax write off for now because it keeps you in a lower tax bracket - and toss that extra payment into a tax-free investment or your 401K or IRA) but, often there are many better options than paying off a low interest mortgage early. Also - if you are carrying any other debt that has a higher interest rate than your mortgage - pay that off first - the interest on those loans is usually just money down the drain, and often isn't even a tax write off.

And remember - this is for a 6.25% mortgage loan - if your interest rate is lower - the amount you will be ahead if you invest instead of pay early will be more.