Mortgage Pay Off Early

Throughout this site we have used a fixed rate mortgage as an example. The principal of prepaying also applies to ADJUSTABLE RATE MORTGAGES (ARM). If your monthly payment has dropped due to lower interest rates, now would be a good time to start prepaying. Just continue to make the same monthly payment you have been making. The difference between the old payment and new payment will be applied to the outstanding principal balance and will help pay down your mortgage. Plus if interest rates go up and you have been making prepayments, the rise in your payment will not be as great since you will be paying interest on a smaller balance due to the prepayments!