However, another home mortgage matter that we are often asked about is whether to pay off your mortgage early or not. The main thing to consider if you are thinking about doing this is whether you need that interest payment which is a major tax deduction in order to keep from paying higher income taxes. That is, for most average families, that home mortgage interest deduction is your major deduction unless you have business deductions. If this is the case, you might want to pay your mortgage off early but not too early. For the usual 30 year mortgage, rather than concentrate on paying it off in the next 5 or 10 years which would put a very heavy burden on you financially, you might want to concentrate on paying it off in 20 years instead of 30 years. If you can pay just a small additional amount each month, you can end up taking a year or more off of the length of your mortgage.

One reason for deciding to pay off your mortgage early is to avoid being caught in the situation of wanting or having to sell your house but owing more on it then you can get for it. Therefore, you can’t sell it right now because you would still be paying off the extra amount. But you still want to move so you need to work at getting the remaining mortgage down below what your house is worth on the current market. If you will need to move to different locations throughout the next 30 years, it is a good idea to try to pay something extra on your monthly mortgage in order to pay it down.

If you still want to pay off your entire mortgage in 5 or 10 years, you will need to pay an additional payment each month. Paying two payments a month will cut your 30 year mortgage down to approximately 10-12 years. However, will this help you? That is, what happens in 12 years when you no longer have your mortgage interest payments to declare on your income taxes and thus have higher taxes to pay the government? If, at that point, you will be retired, you should be in a lower tax bracket and may not need the added deduction of mortgage interest. However, if by then you are in a higher tax bracket (usually our careers and pay checks advance as we get older), you may need that extra deduction even more then you do now.

If you want to pay your mortgage off early but not quite so quickly, say in 25 years, just pay an additional amount onto the equity each month. If your mortgage payment is $1,198 per month, you could write a check for $1,225 each month remembering to list on the payment slip the additional equity amount you are paying. This is a particularly good method for someone who is older and is buying a home. If you are 35 years old, you will be paying on your mortgage until you are 65. What about saving for retirement? In this case, it might be better to pay it off even a couple of years early so you will have less expense when you retire.

However, if you are reading these articles in order to cut back on your expenses today, refinancing at a lower rate of interest is the only viable option. If you cannot refinance at this time, you need to look at changing your life style, hopefully for the better, by selling your house (if its current market value is more then you still owe on it) and moving into an apartment.

Sometimes cutting your monthly expenses is actually more difficult then increasing your earnings. It really depends on your individual personality as to which is easier. But the one thing we are sure of is that it takes less of your time to save money by spending less each month and it takes more of your time to bring in more income. So at least in time it is easy to save on your monthly budget costs.

Now is the time to discuss with yourself or your family which is more important to you, to live in a house or an apartment, keeping in mind that buying a house is not the guaranteed investment it used to be. Do not go on the old assumption that your house will increase in value over time. And remember all the additional costs of maintaining a house. Now you need to decide whether to buy a house in the first place (if you are just starting out right now), or whether to sell your house in order to move into an apartment, or whether to stay where you are with no change.

If you decide to stay in your house, how can you save on your monthly mortgage payment? First, read your contract to see what you are currently paying for interest and then make some phone calls to see what current mortgage interest rates are. That is, if you bought your house at a high interest rate and the interest rates have since come down, you could save money by refinancing your home. For instance, if the interest rate has dropped 2%, you could save around $200 a month although this figure can vary greatly. That is, most mortgages are set up so that you pay more of the interest at the beginning of the loan. That is so that the bank can make their profit first before you decide to pay off your loan early. Statistically, most mortgages only average seven years before the house is sold and the mortgage paid off. Thus if you are still in the first half of your mortgage, you are paying more in interest each month then you are on your home principal value.

How can refinancing help you? Occasionally you will find refinancing available with zero closing costs. However, usually you will have to pay additional points (or percentages) to refinance. If you are in debt, you probably will not be able to come up with the extra cash necessary to pay these closing points. But if there are no points or lower points, take the time and effort to reduce your mortgage. You can usually recover your costs of refinancing within two years if you can lower your interest rate by 1 1/2 to 2 percent. However, make sure you want to stay in that house for at least another five years or it is simply not worth the time and effort. In this case, just from refinancing, you could be saving $2,400 a year.

Perhaps interest rates have increased since purchasing your house. In that case, you will not be able to save anything on this item.