One of the most important keys of getting out of the mountain of debt is paying off your mortgages for your home ahead of time. Most often people do not have an idea that it is possible to pay off their home mortgage before time or early. One tends to fall into the "rut" of thinking that it usually takes around thirty years to pay for your dream house. Wise up and know this - it is not only desirable but possible to pay off home mortgages well before time.

Understand how it works

The monthly home payment is usually made up of the principal amount and the interest. The principal amount - is the part that goes towards actual payment for the house and which reduces what you owe. The other part is the interest which actually goes to your banker! The interest is the banker's profit and does not lessen or reduce what you owe to the bank by a cent. These two parts - the principal and the interest - make up your monthly mortgage.

Many people do not really understand how their monthly payments are divided and do not realize that for the beginning half of the loan term, the bigger part of their monthly payment actually goes towards interest and not towards paying the amount they owe for their house!

Who gets most of your money?

Sooner or later you will realize that the two components of your monthly mortgage - principal and interest - are not equal amounts, and that more of your money is going towards paying interest. It is only after the "halfway point" - for example, 10 years on a 20 year loan - that the bigger part of your money will go towards the principle amount and the lesser part towards the interest. So it all boils down to the fact that the greater chunk of your money on the first half of your loan term is just profit to your banker!

This also means that by the time your monthly payments are totally paid off or amortized, you will have paid off the original amount you owed the bank BUT YOU WILL HAVE ALSO LITERALLY "BOUGHT" YOUR HOME FOUR TIMES!!! Because a total of a certain percentage of your payments have gone to the bank as interest!

Solve the problem by making early "principal payments"

Why is it important to pay off the principle amount before time? The answer is because this will eliminate all further interest on the amount of the principal you have paid. This means that you will not be charged the interest you would normally pay if you paid according to the usual payment schedule. Making these early principle payments is simple. All you need to do is write out a second check with a note "early principle amount payment" in the left corner, and send it ALONG WITH your monthly payment check. The bank will treat this early payment as a reduction of the principal amount you owe, thus reducing your loan directly, which in turn means that YOU DO NOT HAVE TO PAY THE INTEREST ON THAT EARLY PAYMENT!