Can I pay off my loan early?

If you can afford it, and are interested in the considerable advantages of having more equity and/or owning your home free and clear at the earliest possible date, the answer in most cases is yes. The FHA, VA, and even some states do not allow lenders to charge penalties for paying mortgages early or refinancing. In fact, many lenders now include space on monthly statements for borrowers to itemize any additional principal payment they wish to include with their regular payment. If you're unsure about the rules governing pre-payment, review your mortgage agreement.

If you'd like to pay your loan off early, consider these options:

• Save extra every month. With the interest you earn on savings you may be able to make an extra payment at the end of the year.
• Pay an extra twelfth of your principal and interest payment monthly, and at the end of the year, you'll made an extra payment.
• Or just send whatever extra you can every month.

Whichever method you choose, be sure to clearly indicate that the excess payment is to be applied to principal.