Posts Tagged pay off your mortgage

3 Easy Ways to Pay off Your Mortgage Early

My husband and I have been following Dave Ramsey’s Baby Steps for the last 3 years. We have worked diligently at paying off all of our consumer debt, building our emergency fund, saving money for both our children’s college education and our retirement, and now it is time for us to also look at ways that we can pay off our mortgage early.

Because we have sacrificed a lot of the “fun” stuff to make the progress that we have, we want to be sure that we leave some wiggle room in our budget. As a result, we wanted to look at three simple and painless strategies that we can use so that we can still reach the goal of paying off our home early while leaving some money for “fun” as well.

Throw Found Money at Your Mortgage:

Found money is that money that you may not have anticipated or put into your monthly budget. A tax return, overtime pay, extra income, or inheritance is often money that is outside of your regular budget and therefore is not needed for your monthly expenses. Since it’s money that you weren’t really counting on, why not consider throwing it at your mortgage?

Refinance with a Shorter Term:

Another simple way to make sure that you pay off your home early is to consider refinancing it at a shorter term. According to our latest mortgage statement, we currently have 16 years remaining if we follow our scheduled payment plan. When our mortgage term ends in the next year, we are going to be looking at refinancing on a 10-year amortization schedule.

With no debt payments, we have the extra cash flow to afford the slightly larger monthly payments. It will also ensure that we are shaving at least 5 years off our mortgage repayment plan. With this move, our mortgage is guaranteed to be paid off 5 years before we retire, meaning that we’ll have 5 years with a full income to continue to stockpile cash before we bid our careers goodbye.

Switch to a Bi-Weekly or Weekly Mortgage Payment:

Another way to ensure that you pay off your mortgage early, without much effort needed, is to consider switching to a bi-weekly or weekly mortgage payment, rather than making one monthly payment.

If your monthly mortgage payment is $1200, your bi-weekly payment would be $600. The magic is that instead of making 12 mortgage payments for a total of $14,400 per year, you would now be making 26 payments for a total of $15,600. Without even thinking about it, you end up making an extra mortgage payment every year.

We currently live in our forever home and are looking forward to the day when we can say that we own it outright. Living without a mortgage payment would not only give us tremendous peace of mind, since we would no longer owe anyone anything, but it would also mean that our incomes are completely freed up to build wealth and give generously.

Your Turn!

  • What would motivate you to pay off ALL of your debt?