Can you imagine what it would be like to live mortgage free?
Imagine if all that money you pay each month to the bank went to your very own pocket instead. That sounds pretty nice, doesn’t it?
You can live a mortgage free life if you fully commit to paying off your mortgage early!! We’re going to show you our top tips to help you pay off your mortgage fast and how that’s going to change your life!
Who Wants To Live Mortgage Free?
Everyone… Everyone wants to be mortgage-free but believe it or not, only a small portion of the homeowner population actually outright owns their house.
Sadly, most homes actually belong to a bank.
The real question is, how do you become a member of that exclusive club? How do you buck the norm and become one of the few people out there that can say they truly own their house?
We’re going to show you some proven tricks and tips that we have used to pay off our house fast.
At the time of writing this, we are on track to pay our house off in just 5 years! That’s 25 years faster than the bank expected and they hate us for it!
Benefits Of Paying Off A Mortgage Fast
Before we get into how to pay off your mortgage fast, let’s talk about the benefits of doing it.
Let’s first talk about the lifestyle gains of paying off your mortgage before we get into the money talk.
Those are all great questions and your current answers might not be one you’re happy with. But what if you didn’t have a mortgage to pay every month? I bet that would change your answer to a lot of those questions.
When you pay off your mortgage early, you free up that cash to go towards other things like investing, savings, or even traveling! Your quality of life will go up because you won’t be stressing about money!
I think it’s pretty obvious what kind of positive effect not having a mortgage will have on your quality of living. Let’s talk about money now. We’ll use our house as an example.
Paying Off Your House Saves You Money
When we bought our house in 2017, it came with a $206,500 price tag. That left us with a $1,250 mortgage payment every month.
It’s not a crazy expensive mortgage payment, but it’s a mortgage payment none the less. We are determined to get rid of it as fast as possible.
When we bought our house we knew we had to plan ahead for it. We spent a year saving and planning for the biggest purchase of our lives.
We created a detailed plan of how we wanted to pay this thing off before we even bought it. We settled on a 5-year plan.
Maybe your asking “but what’s the rush to pay it off fast.” Everybody tells us there’s no rush.
If we paid the minimum payment every month for the next 30 years, we would pay over $140,000 in interest in the house. That means we would pay over $346,000 for a $206,000 house. That’s insane! It’s a losing deal.
Our 5-year plan will have us paying only about $30,000 in interest. That saves us $110,000 in interest payments!
I think I mentioned earlier that the bank hates us, right??
Even paying a little extra every month can save you thousands of dollars in interest over the long run!
Alright, let’s get into our top tips to help you pay off your house and live mortgage free!
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10 Tips To A Life With A Paid Off Mortgage
Now that we’ve covered the advantages of paying off your mortgage early, let’s talk about ways to make that happen. Here are 10 ways to help you pay off your mortgage quickly and save you a lot of money in the process.
1. Buy A House Below Your Budget
This might seem like a no-brainer, but it’s a tip that is often lost in the glitz and glam of a new house. Buying a house below your actual budget makes it easier to pay off that house.
When we were house shopping, we had an upper budget limit of $250,000. We bought a house $44,000 below that which left us with extra cash every month.
When you have extra cash every month, you can use that to pay off your mortgage or other debt!
This tip can be tricky though. It’s easy to convince yourself that the house with the finished kitchen is worth going over your budget just a little bit. Don’t talk yourself into going over your budget. You don’t want to be house broke!
2. Make Bi-Weekly Payments
If you have the option to make bi-weekly mortgage payments instead of one monthly payment, take it. Take it and run because this is going to save you a lot of money.
By choosing to make bi-weekly payments you end up paying one extra mortgage payment per year. This will help reduce the amount of interest you pay and the time it takes to pay off the mortgage.
One thing to look for when choosing to make bi-weekly payments is to make sure that your bank will immediately credit the first payment towards the principal on your loan.
Some banks wait to credit the first payment until the second payment is received. If this is the case you won’t receive the full benefits of bi-weekly payments.
3. Find A Side Hustle That Makes Money
Our secret weapon to paying off our house in 5 years is our strong side hustle game! Over the course of the last two years, we’ve built a blogging business that makes several thousand dollars each month!
We live off of my day job salary and any money that the blog brings in goes straight to our house. Heck, last month it made about $20,000 from our side hustles!
That’s a huge payment going towards our house!
Maybe you’re not ready to start your own blog and that’s fine. If you’re looking for other ways to make money, check out our list of 40 Ways To Make Extra Money This Week.
4. Create A Budget That Helps You Pay Extra
Whether we’re talking about paying off your house or any other kind of debt, you MUST have a strong budget in place.
When you create a budget, you’re telling all your money where it should be going. This allows you to find areas where you can cut back on some spending to free up cash for extra payments on the house.
You’ll love the Monthly Savings Tracker and the Plan to Save $1,400 in 1 Year!
5. Round-Up To Pay Off Your Mortgage Fast
If you don’t have a lot of extra money left over each month, this is a great way to pay a little extra without breaking the bank. Take whatever your mortgage payment is each month and round up to the next even $100.
Example: our mortgage is $1,250 per month so we would round up to $1,300. That extra little bit of money each month amounts to half a mortgage payment extra each year.
It may not seem like much, but that little extra payment will add up over the life of your loan and help shave a couple of years off the payback time!
6. Use Bonuses Wisely
If you’re fortunate enough to receive an annual work bonus or even if you receive a spot bonus at work, take that money and put it down on your house.
Heck, in April when we all do our taxes, if you end up with a refund put that money down on your house as well.
Any extra payments you make will reduce the amount of interest you pay and the time to pay off your house.
7. Sell Unwanted Junk
One man’s trash is another man’s treasure, right??
If you have stuff laying around the house that you haven’t used in a while or simply don’t need? Why not sell it?
There are tons of really easy ways to sell stuff online now. This is an easy way to make extra cash that you can use to pay off your mortgage faster!
We made over $400 in one month selling old stuff that was just laying around the house! It’s super simple and you can do it too!
8. Don’t Waste Money On New Cars
It can be really tempting to upgrade your car every couple of years. We all like the idea of a shiny, new car sitting in the driveway, but let’s be real… CARS ARE EXPENSIVE!
One way to save a little extra money is to drive cars until they don’t run anymore. Once your car is paid off, you can use all that extra money that would go towards your car payment and put it towards paying off the house.
If you currently have a $300 per month car payment, you should consider selling it and getting a car that you can pay cash for.
That extra $300 per month adds up to $3,600 over the course of a year. That’s at least an extra mortgage payment for most people.
9. Refinance Your Loan
Refinancing your loan is an option that could save you money in the long run. If you’re able to refinance your loan for a lower interest rate it could save you money.
Sometimes you might want to refinance to a shorter mortgage term so you can pay off your mortgage early but keep in mind your payments will be higher if you do this.
Shorter mortgage terms generally have lower interest rates which make them an added bonus. Make sure if you refinance to a shorter mortgage term you can afford the higher payments.
The one thing to keep in mind with refinancing your mortgage is that there will be fees associated as you have to apply, get an appraisal, and pay closing costs.
You can expect to pay about 2% to 4% of the mortgage price if you refinance. This could end up costing you money if you don’t plan to stay in the house long term.
I personally would use this as a last resort due to the complexity of refinancing.
10. Recast Your Loan Instead Of Refinancing
Have you ever heard of recasting your mortgage? It’s okay if you said no, most people haven’t.
Recasting a mortgage is where you make a lump sum payment towards your principle and then your mortgage company adjusts your amortization schedule.
An amortization schedule is just a plan of how much of your monthly mortgage payment goes to principal and how much goes to interest over the course of your loan.
At the beginning of the loan, more money goes to interest. That’s how banks make sure they get some money if you pay off your mortgage fast.
As you pay down your mortgage, more money starts to go towards the principal versus the interest. When you recast, you accelerate your amortization schedule so more money starts going towards the principal instead of interest.
It helps you speed up your timeline to pay off your house and costs a couple of hundred dollars instead of thousands like refinancing.
You Can Learn How To Live Mortgage Free
Paying off your mortgage early can seem like a daunting task. We’re talking about hundreds of thousands of dollars and years of work.
Even though it might seem impossible to pay off your mortgage early, with a little determination and the tips listed above, you can make it happen! Just think of how nice it will be when you make that last mortgage payment.
Remember earlier when I asked you if you were saving for retirement or building your emergency fund? Once you pay off your house, you can start doing all of that and more!
So what do you say?? Are you ready to start tackling your mortgage?
Don’t forget to pick up your copy of the Budget Binder to make it even easier!!
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Are you trying to pay off your mortgage? What other tips do you have for us?
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