How to Pay Off Your Mortgage Faster

A mortgage is often the biggest loan you will ever take out in your lifetime. If you stop and think about how old you would actually be when you pay off your home, oftentimes, it can be a lot later than you would like. I am currently looking at paying off my own home well before I turn 40. Now, it seems only fair for me to let you know that it was actually my husband who originally purchased our home, and he did so only a few years before I moved in. You can pay off your mortgage, along with all of your other loans or debt, without actually earning more income than you already have (although, it does go even faster that way). Here are some tips on how to use the same method I have used. I call it the “snowball” method.

Start out with a small sacrifice. Think about all of the little conveniences that you pay for every day. Is there an item or items that you are comfortable with giving up? Let’s say that you decide that you are willing to give up your $4 coffee in exchange for a $1 coffee. If you were to do that for five days a week, you would have an extra $60 or so a month. Start by using that extra money you freed up by paying it on top of what you already pay for your highest-rate credit card. (If you don’t have any credit card debt, great, you are already ahead and can skip to your car loan.) You’ll notice a difference pretty quickly, especially if you add other small sacrifices into it. If you start out small, it can snow ball very fast into something bigger.

Move on to the next loan. Once you get your highest-rate credit card, use the money that you were using for that and roll it over to the next credit card. For example; if you had a $39 payment you were making on your first credit card, plus that extra $60 a month, you would now pay $99 extra on the next card, on top of what you already were paying. (See why I call this the “Snowball” method?)

Pay off your car loan. This is where things start to move very fast. Take all of the extra money you have from your sacrifices and credit card payments (that you no longer have to pay) and apply it to your principal on your car loan. This is where I started because I already had no credit card debt. It seems like a slower start, but once you start seeing your balance go down, those sacrifices start getting easier to make. You will be amazed how fast your car gets paid off.

Time to tackle that mortgage! My husband and I decided to refinance to a 15-year fixed rate mortgage from a 30-year fixed rate mortgage because we pay about the same amount a month, but get it paid off seven years sooner, even with just minimum payments. We were able to do this because the interest rates have dropped dramatically since the original loan, and because the borrowed amount is substantially lower. If you can’t afford a refinance, just apply all of the money that you are no longer paying to credit card companies or for car loans to your principal. Think of this: If you paid $39 a month on your first credit card a month and $29 on your second, added in the extra $60 from your coffee sacrifice, that is $128. Add that to your car payment that is, let’s say $450 per month, and you can pay an extra $578 a month extra on your mortgage. That’s $6,936 extra per year. That would substantially decrease the time it takes you to pay down your mortgage.

This plan takes a lot of discipline to stick to, trust me. But if you can stick with it, it is very worth it in the long run. Who doesn’t want to have their home paid off before they retire, or even before their children all graduate from high school? Who knows? That extra money may come in handy when it comes time to pay for them to go to college.


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