Pay off your mortgage? Questions to ask yourself first

It sounds great -- living mortgage free! But there are definite pros and cons to paying off your mortgage early.

Before you commit to making such a huge -- and potentially life changing -- expenditure, there are several questions you need to ask yourself.

To complete an early mortgage payoff, you need to closely examine your financial situation and be sure you don't undertake this important decision lightly. Will this outlay leave you more financially secure than you are now?

Do you have any other significant debt?

Could the money you'll use to pay off your mortgage be put to better use as an investment? If you are inclined to taking financial risks, you might consider investing your money instead. The profits you realize from your investments may offset the expense of the mortgage, and allow you to come out the other side with your principle intact.

Will you still be able to enjoy life in the manner to which you've become accustomed? In other words, if you lay out all your cash to pay off your mortgage, will you still have enough to entertain, garden, do home improvement projects, travel and generally enjoy your life?

Can you afford your kids' college education if you pay down your mortgage?

Can you afford your retirement? These areas are too important to ignore in your haste to pay off the mortgage

If your finances show that you are in a position to pay off your mortgage early without sacrificing other important areas of your life then there are various ways to go about a mortgage pay off.

1. Make two mortgage payments each month on a bi-weekly plan. This has become a popular method to speed up paying off a mortgage, lowering the balance rapidly.

2. Check with your lender to see if you are allowed to prepay your mortgage without restrictions or penalties, and if so make lump sum payments whenever possible. For example put your yearly bonus toward your mortgage to pay it down.

3. Refinance your loan to a shorten the length of time you will owe on your mortgage. Your payments will be considerably higher but the mortgage will be paid off much faster.

4. Make high payments if you can afford to. Speak to your lender about arranging a new payment schedule.

5. Pay a lower interest rate by refinancing the house, but continue to pay the same amount you do now at the higher rate to payoff the mortgage faster.

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