How to Pay Off Your Mortgage Faster
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Finding new ways to pay off your mortgage faster is a topic I could discuss endlessly. When I was in the throes of my aggressive mortgage debt pay-down, I endlessly researched how to do it by reading all of the things about it. Any article that discussed it hooked me. I was obsessed.
As far as obsessions go, I’d say that paying off your mortgage is a healthy one to have. 🙂 Once my husband and I set our sights on that goal, we had a one-track mind, and we accomplished that feat in 3.5 years by trying everything under the sun, including all of these options. Here are seven ways you too can pay off your mortgage faster.
(Maybe) Refinance Your mortgage
After working for seven years in the mortgage industry, I came across a lot of borrowers who wanted to refinance simply to get a shorter term to pay off their mortgage faster, which is a good idea in theory, but it doesn’t always make sense for everyone.
Because interest rates have been low for several years, don’t refinance to a shorter term if you already have a great interest rate or you’ll only end up adding more money to your principal balance with thousands of dollars of closing costs.
Simply adding to your current payment to match what you would pay with a shorter term could be all of the “refinancing” that you need, so make sure to run the numbers first. If you do find that you might benefit from a refinance, compare rates at LendingTree to find the lowest rate possible.
Never Make a Minimum Payment
Even if you can’t cut 10, 15, or 20 years off of your mortgage, be diligent enough to never make a minimum payment. Always round up, even if it’s only a few dollars, because over a period of years, those extra dollars add up to hundreds or thousands of dollars when you factor in the interest savings. If you’re struggling to figure out where to find that extra money to pay above your mortgage will come from, consider using a tool like Personal Capital to monitor your spending/cash outflows so you can identify areas to come up with that extra money.
Every extra dollar you can squeeze out now will save you money in interest in the future. Whether it’s an extra $2, $20, or $200, send the extra that you can now and knock at least a few payments off of your mortgage term by simply doing this one easy thing.
Set Up Bi-Weekly Payments
If you’re paid bi-weekly like a lot of employees, set up your mortgage payments to auto draft on pay day. By doing this, you’ll make 26 half payments per year, which results in one extra payment per year. That’s not likely to sting as much as trying to add on an entire extra payment all at once at the end of the year.
Throw Everything You Can At It
Our favorite method of paying down our mortgage was to simply throw everything we had at it. I don’t mean we were rolling in the dough like a couple of millionaires (because we clearly aren’t millionaires), but we did throw every last cent we could at it, without sacrificing our retirement to do it.
Birthday and Christmas money, bonuses from work, money from selling stuff on Craigslist and extra money from side hustles all went straight to our mortgage principal. By using “extra” money, we didn’t feel like we were missing out on no longer having that money.
Remember to Make It Fun
While paying off your mortgage is an amazingly worthy and ambitious goal, don’t sacrifice what is important to you, whether it’s weekend trips home to visit family or date nights with your honey (two things that are important to me to spend money on.)
You’ll have to make some sacrifices, but you don’t have to give up everything you love to get there. Continue to spend within your values while working towards paying down your mortgage, or else you risk burnout.
Decide What You Can Sacrifice (Just Not Your Retirement)
While I wouldn’t recommend sacrificing what is truly important to you, you’ll undoubtedly have to sacrifice something along the way. (I repeat: just not retirement!) Maybe you have to wait a few more years to replace your car or delay that trip to Europe. Whatever it is, becoming completely debt free is totally worth the sacrifices you’ll make along the way, I promise.
Track Your Progress
It may sound like a simple idea, but make sure to track your payoff progress in a visual way because it keeps it in the front of your mind. It creates excitement when you have a visible reminder to show how well you’re doing.
My husband and I posted our new mortgage statement on our refrigerator every month and text messaged each other during work hours to giggle about how much our principal amount had decreased since our last payment. I know that sounds not sexy at all, but at the time, it undoubtedly was. When you share common goals with your spouse, it’s pretty exciting, even if it’s as mundane as paying off debt.
Really, it all comes down to this: Stop spending. Save your money. Make it a priority, your number one goal. It’s not rocket science. Throw your heart into it, and it’ll happen before you know it.
Happy mortgage busting!
Are you ready to show your mortgage who’s boss? How close are you to paying off your mortgage? What have you sacrificed to get there?