You can't browse the Internet or pick up a newspaper without someone telling you that if you don't want to be a financial idiot and end up homeless and stealing from bag ladies you need to pay your mortgage off as soon as possible. Because you will pay less interest over the life of the loan, retire your mortgage early, and beautiful supermodels or hunky movie stars will throw themselves at you. And to a certain extent, that's true (not about the models, silly). But you do pay less interest over the life of the loan and you may feel more financially secure with no mortgage.

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But what about now? Who is better off in a shaky economy? One newly-unemployed homeowner put every extra cent into prepaying her mortgage. But in an emergency, the only way to get that money back is to borrow against her home equity. And guess what? Her bank isn't exactly bending over backwards to lend her money while she's out of work--in other words, banks are notorious for only being willing to lend to those who don't actually need the cash. The other homeowner put his money into a savings account instead, and when he lost his job he was able to pay his bills until he got a new one. He didn't end up with bad credit or the Foreclosure Police breathing down his neck. And he didn't need his lender's permission to take care of business.

The one legitimate reason for paying down a mortgage early is to get rid of a really expensive sub-prime or bad credit home loan. If you are paying 12% on your home loan, and can reduce that balance enough to qualify for a 6% refinance, it probably makes sense for you to do so.

And for those who can't shake the image of the hunks and supermodels, those who really want to pay their mortgage off early, here's a plan:

  1. Build up an emergency fund first--depending on how secure your job and health are, it should be three to nine months of expenses.
  2. Pay off high interest debt like credit cards. Those cost you a lot more than your mortgage and are not tax deductible.
  3. Open a savings account for your house. Put money in whenever you can, and look for safe accounts with the best interest rates. This way you have access to your money if you need it. And you can earn interest too.
  4. Pay off that sucker when you have enough savings to retire your mortgage and are financially secure. Then congratulate yourself!

Some creative types may try to sell you an early payoff service. Don't bite. Many of them simply have you pay your mortgage every two weeks instead of once a month. By making half a mortgage payment every two weeks, you make an extra mortgage payment every year--not exactly rocket science. And it's crazy--companies like that can charge hundreds of dollars to enroll in their programs. Plus up to $40 for each payment!

To add injury to insult, these clowns don't send in the extra payments as you make them. They hang onto your money (and your interest) until the end of the month. And it may not even be safe--what if the company makes your payment late and trashes your credit?! What if it goes belly up? It happens--just say no to creeps getting their hands on your money.

You can pay your mortgage down the same way without the help of a dubious firm--simply transfer half a mortgage payment every two weeks into a checking account (preferably interest-bearing), then pay your mortgage from that account once a month. The balance of that account will grow until you have saved anough to pay off your mortgage. Or you can add a little extra to every payment and request that it be credited towardyour principal balance. Then you will be smartly managing your money and your mortgage.