Mortgage experts?  Paying off early?

Mortgage experts? Paying off early?

Hi guise,

I am feeling ambitious lately, and I want to pay off our second mortgage ASAP.

FYI items:
- The balance is $34,486.91.
- The interest rate is 6.178%.
- The payments are $341.58 each month.
- The loan is not a result of a cash out. We refi'd in 2005 to get out of our ARM and into a fixed rate, and the best deal resulted in 2 loans.
- There is no prepayment penalty.
- I am not concerned with keeping the line of credit open for the sake of my credit score, or for tax purposes. I want it paid off.

My husband is starting a new job, which means we'll have some extra money in our pockets. Instead of pissing away the raise on ebay and on dinners out, I want to have my thoughts organized on how I will apply this extra money before the first bigger paycheck comes.

I want to pay off the loan as efficiently and quickly as possible - making the most use of every penny I can.

My questions:
- What are the advantages and disadvantages to applying extra moneys each month vs. saving money each month and applying one lump sum at the end of the year? I know I can earn interest if I save, but how does that small amount of interest earned compare to the benefits of throwing the moneys at the loan as it comes in?
- If I did save the extra moneys in a savings account to apply once/year, which is the best month to apply the extra moneys to the loan, tax wise? January? December? Why?
- How would you go about paying the mortgage down?
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