If you're a homeowner, you probably know that a large part of your monthly mortgage payment is interest. Over the life of your loan, the interest keeps compounding. So while the amount you owe goes steadily downward, the arithmetic is not quite as simple as deducting each month's payment from the loan amount.

If paying off your mortgage a little early sounds appealing, you can do so by making extra principal payments. First check with your lender to make sure you won't incur an early payment penalty. If not, simply adding one extra payment a year (principal plus interest) will reduce a 30-year loan to about 17 years. You can do that as a single payment or spread it out over 12 months. But be sure to tell your lender that the extra money is to be credited to principal. Keep a record of your payments and review it once a year to be certain the lender has followed your directions.

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