Money Expert Tiffany Aliche Says This Is a ‘Smarter Approach’ To Paying Off Your Mortgage Early
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Nick Perry
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Amen Oyiboke
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For homeowners, a mortgage is likely the biggest expense in their lives — and it’s attached to their biggest asset. It’s natural to want to own that asset outright, says money expert and influencer Tiffany Aliche, but that doesn’t mean you should change your mortgage to do it. Aliche (@thebudgetnista on Instagram) has amassed more than 650,000 followers, so when she speaks, it’s worth tuning in to listen.
Finding smarter ways to pay off your mortgage faster can help you save on interest, build equity sooner, and achieve financial freedom ahead of schedule.
Here’s what Aliche believes is the smart approach to paying off your mortgage early.
How Many Americans Have 30-Year Mortgages?
According to U.S. Census Bureau data, 61.2% of American homeowners have a mortgage in 2024. The most recent available data reports that 89% of those mortgages are 30-year fixed mortgages. It’s a very common loan in American homebuying, but it saddles you with 30 years of debt. Many people don’t stay in their homes that long, which is one reason why they think it may make sense to pay off the debt earlier.
Should You Refinance Into a 15-Year Mortgage?
Nobody wants to be in debt. It can impact your credit score and make it harder to get additional loans, not to mention the monthly payments cutting into your take-home pay. Aliche, however, says to resist the urge to refinance into a 15-year mortgage.
She noted, “A shorter loan term means higher monthly payments. If you hit a financial rough patch, will you still be able to manage those bigger payments?”
A recent report on economic well-being showed that 51% of Americans would struggle to cover a $1,000 emergency expense. If you’re among that number, can you really afford to pay hundreds more every month on your mortgage? Even if you could, you’d likely be forced to make significant sacrifices in other areas of your life, leading to a less happy lifestyle.
Not only that but if you ever hit a financial hurdle and can’t afford to make an increased payment on time, you’ll face fees and penalties. Miss several payments, and you’ll risk defaulting on the loan and putting your home in foreclosure.
Finally, refinancing a mortgage can cost as much as 6% of the remaining loan balance. Considering you likely have much more than 15 years left on your mortgage, your refinancing costs will be thousands of dollars. For instance, 6% of $300,000 is an $18,000 refinancing cost.
A Smarter Approach To Paying Off Your Mortgage Early
Aliche says there’s a smarter way to pay off your mortgage early. “Stick with the longer loan period and make extra principal payments when you can,” she said. “That way, you’ll pay down your loan faster, without being locked into higher payments.” This strategy will allow you to shed a few months or, over time, even several years off your remaining loan period.
Before you pursue this approach, however, Aliche noted that it’s important to verify two things:
- There’s no prepayment penalty on your loan.
- Extra payments go towards the principal (the amount you owe), not the interest — the loan fees.
With this strategy, you give yourself extra flexibility without getting locked into higher monthly payments. Whenever you have a financial windfall, like a bonus at work or an inheritance, you can use that extra money to pay down the loan principal and shorten the amount of time you’ll have to make payments. You can even work extra payments into your monthly budget, saving a little bit each month towards making an extra payment once every quarter.
Regardless of how you make extra payments, Aliche believes, this strategy will give you the freedom to pay off your mortgage faster without leaving you extra vulnerable to financial emergencies.
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