Owning your home outright is an amazing feeling and a goal that everyone paying a mortgage should be striving toward. I’m going to share how I was able to achieve this, but I would be remiss if I didn’t make note of one thing before I do. Before focusing heavily on your mortgage, you should make sure that you have a good emergency fund built up. You don’t want to find yourself in a position where all of your cash is tied up as equity in your home. It would be unfortunate to have a huge financial obligation come up right after paying off your home and have to go into debt to cover it.
With that out of the way, let’s dive into three strategies that I used to pay off my mortgage early. If you follow these steps yourself, you may find that homeownership is right around the corner.
Click to read more about how one man saved himself over $100K in mortgage interest.
I Made a Payment Every Two Weeks
This is one of the most significant pieces of advice I have with regards to paying off your mortgage faster. By doing just this step alone, you could potentially shave five years off of a 30-year mortgage (depending on your interest rate). How is that possible? Well, the gist is that by paying every two weeks, you are making 26 payments a year, or 13 months’ worth of payments. So, it is an easy way to pay an extra month’s payment each year without even feeling it.
It’s worth noting that some banks are not set up to process payments like this, and will try to force you into traditional monthly payments. That doesn’t mean you can’t do this strategy. It just means that you will need to multiply your monthly payment amount by 1.083 (i.e., 13 divided by 12) in order to pay the equivalent of bimonthly payments or 13 payments each year.
We Reduced Our Tax Refund
By claiming more exemptions on our W-4 forms, we reduced our refund from the IRS. This freed up more money that we could, in turn, add to our mortgage payment each month. You can reach out to your HR department at work to make those changes.
Just by adding $200 a month to your mortgage payment it could reduce your payoff time by 9 years on a 30-year mortgage. That makes a big difference. Consider allocating what would have been a tax refund, as well as any bonuses or other financial windfalls toward your mortgage.
I Started a Side Business
While the two tactics I’ve stated work, there’s an additional option for paying down your mortgage faster. It’s something that we did that made a huge difference, but won’t be in the cards for everyone. We started a side business, and put that additional income toward our mortgage.
There are so many home-based businesses these days that offer great flexibility and earning potential. Why not trade in a few Netflix hours each week to actually earn some money? I traded in some of my TV-binging time each week for starting and growing a side business.
Eventually, my side business was generating more than $1,000 a month — money that we could add to our mortgage payment. Do you know how fast you can pay off a mortgage when you are paying an extra $1,000 each month? In our case, it shaved 21 years off of a 30-year mortgage.
If you know that you want to own a home and you’re interested in making that a reality sooner rather than later, try some of these tips. Whether you utilize one or all three of them, you will make a significant dent in your mortgage and be well on your way to a special place you can truly call your own.
Click through to read more about why one man isn’t in a hurry to pay off his mortgage.
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