Lump Sum Payoff

• 1). Review your original loan documents to determine if you will incur a prepayment penalty for paying off the mortgage loan early. While many lenders no longer charge prepayment penalties, some lenders charge a penalty for prepaying your mortgage before a certain length of time has passed. The amount of time required to avoid the penalty is usually a year or more. If you are within a couple of months of avoiding the prepayment penalty altogether, it will likely save you money to wait and pay off the mortgage after the penalty period has passed.
  
  
• 2). Contact the lender and get an accurate payoff amount for the mortgage and an expiration date for the payoff amount. Payoff amounts are generally good for a range of days, usually a week or maybe two.
  
  
• 3). Obtain a cashier's check for the payoff amount and delivery it to the lender for processing. It is always best to deliver large amounts in person, if possible. If you must mail the cashier's check, mail it priority or overnight with tracking so that you can ascertain the lender received the funds. Once the lender processes the payment, you will receive a clear deed to the home.
  
  

Extra Monthly Payments

• 1). Review your original loan documents to determine when additional principle payments are applied. Some loan types, such as FHA loans, specify that any additional principle payments made after receipt of the regular monthly mortgage payment will not be posted to the loan until the first of the next month. If your loan limits principle payment application in this manner, organize your additional payments so that you send them with the regular monthly mortgage payment.
  
  
• 2). Prepare the monthly check for your mortgage payment with the additional principle payment added to the regular loan payment, or if you pay online, include the additional principle payment with the amount of the online payment. Make sure you indicate on the check, the mortgage statement returned with the check or in a designated online field that the additional funds are to be applied to principle only.
  
  
• 3). Check your mortgage statement the following month to ensure the funds were properly applied for the prior month's payment. Follow up with the lender to correct any errors.