Prepay in the First Few Years

• During the first five to seven years of a mortgage, the interest payments will be the largest driving factor in your monthly payment. Adding money onto the principal balance during this time will reduce interest fees over the duration of the loan. Making just one extra mortgage principal payment per year will reduce a 30-year mortgage to a 21-year mortgage.
  
  This prepayment does not have to come in the form of a large lump sum. You could pay the single extra principal payment over an entire year, changing your monthly payment by just a few dollars per month.
  
  

Mark Your Extra Payment

• Every time you make an adjustment to your mortgage payment, it's important to validate and verify that the extra money was applied directly to the principal on the loan and not divvied up between principal and interest. Marking your extra payments by using a second check and recording that information will help ensure that payments are not mismanaged. Regardless, it is still wise to call the lender and verify that your payment was applied correctly.
  
  

Yearly Lump Sum

• Another good way of paying off or paying down a mortgage would be to pay an annual lump sum payment and have it applied directly to your principal balance. This will take a large bite out of the principal. However, some mortgages have stipulations on how often you can pay extra per year, so it's wise to know their limits.