We will discuss how to pay off your mortgage early. The secrets revealed will allow you to pay off your mortgage early. When you pay off your mortgage early you will put yourself on the path to reaching financial independence.
With no mortgage payment just dream what you could do! Anything is possible!
You would not even need to worry about having a job because you will own, yes own your own home. Just think of the peace of mind.
For most folks buying a home is the largest purchase of their lives. It will also be the largest asset they own. It will also be the largest debt.
Do you really own your home if you have a thirty year mortgage? The bank owns it and you right along with this large debt.
The day you close on your new home is one of joy and fear. Finally your own home. What happens if I can’t pay for it?
No one pays off their home. You always have a mortgage payment. It is impossible to ever pay it off.
Well the truth is you can join many financially independent folks with a paid for house.
But would it not be better to invest the money and earn a higher rate of return?
Let’s explore the possibilities. The secrets will be revealed to you as we go deeper into some methods to pay off your mortgage.
One final thought before we get started. If you pay off your mortgage and after a few months you don’t like it you can go get a mortgage.
Create the foundation before you attack the mortgage
Have an emergence fund
This is extremely important you want to have at least three months in place. I personally prefer closer to six. Here is an excellent article on why one is important.
Eliminate all other debt
Before putting all your available cash on the mortgage you must be completely debt free. No credit card debt, no auto loan, no student debt, etc. If you need a plan to achieve freedom from being a debt slave get the best plan here.
Contribute at least 15% to retirement
While getting the mortgage paid off is your goal you must not neglect your future. Make sure you are funding your retirement accounts and have achieved 15% this will allow you to build long term wealth.
Have the kid’s college fund established
If you have kids you will want to get a college fund established. You don’t have to have it fully funded before you start paying off the mortgage but you will want to get it started and devise a plan.
Payoff the mortgage or invest?
Earn more from investments than you save in interest payments
But if I was to invest I could earn a better return than paying off the mortgage early. This mathematically is true and appears to make great sense. There are other factors to consider.
Here is a good article that walks you through the calculation.
Consider the risks
Take into account the risk associated with carrying a mortgage. What if for some reason you don’t make the payments and loose the house to the bank. Loss of job, illness unforeseen accident. With a paid for house you will decrease this risk.
The peace of mind owning a fully paid for home
What would it feel like having a fully paid for home. The grass feels different when it is yours! If something was to happen you would have a roof over your head. Your family would be protected.
Create freedom to do other things
No mortgage payment, what will you do with the extra money? Save for retirement? Kid’s college fund? Plan that vacation you always wanted. Buy that new toy you always wanted. Just think about it.
Lose tax deduction
This one make no sense. Get a mortgage, pay the bank $5,000 a year in interest to save $1,500 in taxes. Not sure those recommending this can do math. But I hear it all the time. And to add insult to injury the new tax law has increased the standard deduction to an amount that most will not be able to deduct. So forget this objection.
Still have property taxes, maintenance, home owners insurance, HOA dues, and other expenses
There is no way around this you must pay property tax. The house is yours so you will want to maintain it. Now homeowners insurance is for your protection not the banks. And of course you may remodel or get somebody to cut the lawn.
Strategies to get the mortgage paid off early
Add extra to your monthly payment
This is by far the best and easiest way to accomplish paying off your mortgage early. Add extra to the principle, make sure it gets applied to the principle not interest. Here is a calculator to help you calculate how much you should pay to get a 30 year mortgage paid in 15 or 10 years. Or if you pay a certain amount every month how soon will the mortgage be paid off.
Pay bi-weekly
Make payments every two weeks. If your mortgage permits. This will give you one extra payment per year. Thirteen instead of twelve. This is not one of my favorites but some folks like it because they get paid biweekly (26 times per year). If you like it then do it. It will help you get the mortgage paid down quicker.
Here is a little tip. Take the payment and divide it by twelve and add it to the principle payment every month. This will produce the seam result.
Refinance from a 30 to a 15
This will cut your mortgage time in half. It is not necessary because you can once again add enough to your monthly payment to accomplish the same result. If you do decide to refinance make sure you will get back any closing costs in about 18 months. In other words your savings divided into the closing costs should be 18 or less.
Make lump sum payments
Use your bonus or perhaps an inheritance to get the mortgage paid off. How about even a second job to get this accomplished.
A few Final Thoughts
Getting your mortgage paid off quicker than 30 years is not a feat that is out of the question. It is possible. You must focus and be diligent.
Make sure your mortgage company will accept additional principle payments and there is no prepayment penalty. Most mortgages will not be an issue but make sure anyway.
Millionaires get their mortgage paid off in an average of 10 years. So go at it construct your plan and put it into action.
I appreciate you reading along. Please share this with a friend. Remember sharing is caring!
You covered all the quick payoff options. What was missing thought is NEVER get scammed by your mortgage servicer selling you a program (typically around $400) to pay twice a month. It’s a scam as hidden in the fine print, they don’t apply the early payment to your mortgage principal so you’re not saving any interest.
Unfortunately, there are always scammers. You do not need any servicer to help you pay off early. It can be done yourself. That was the focus. You do however raise a good point.
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