Strategies to Accelerate Paying Off Your Mortgage

Why You Need A Pre-approval - Geneva Financial

Paying off your mortgage early might seem impossible, but with determination and some strategic planning, it’s a goal that most people can achieve. It’s currently the top financial priority for my husband and me, and we’ve been diligently working to reduce our mortgage balance.

Our Journey to Paying Off Our Mortgage Early

We didn’t always have this focus. Our previous house was too large and not in a great neighborhood. Fortunately, we sold it and broke even. After a hectic search, we found a foreclosure property in the country, which was much cheaper despite needing some work. Downsizing allowed us to lower our mortgage significantly, and today we’re nearly debt-free, including our mortgage.

Sharing Our Experience

While I don’t often discuss this in person, I enjoy writing about it on my blog. Many people are eager to learn how we’re achieving this goal. Paying down a mortgage is a hot topic in personal finance, and here are some tips we’ve used to pay off our mortgage faster.

Value-Based Spending

To get serious about paying off our mortgage, we scrutinized our spending habits. By focusing on value-based spending, we cut out expenses that didn’t bring us joy. This included reducing restaurant visits, trimming our grocery bill, and eliminating unnecessary shopping. We also stopped buying gifts for holidays like Mother’s Day and Valentine’s Day, choosing instead to spend quality time together. These changes didn’t feel like sacrifices and made a significant impact on our finances.

Buy Less Than You Can Afford

If you’re house hunting, consider buying a home that’s below your budget. This trend is becoming more popular, as many people are moving away from the idea of owning large, expensive homes. Opting for a modest home with lower mortgage and utility payments can free up money for other financial goals.

Consider Downsizing

If paying off your mortgage quickly seems out of reach, consider downsizing. A smaller home can reduce your mortgage payment, making it easier to manage your finances. Downsizing not only helps financially but also reduces clutter and simplifies home maintenance.

Choose Your Payoff Strategy

There are various strategies to pay down your mortgage. Here are some of my favorites:

  1. Tax Refunds: Apply your annual tax refund to your mortgage principal.
  2. Extra Income: Use raises, bonuses, and gifts to make additional payments.
  3. Side Hustles: Start a side job and use the earnings for your mortgage.
  4. Biweekly Payments: Make biweekly mortgage payments to add an extra payment each year.
  5. Round Up Payments: Round up your mortgage payments to the nearest hundred. Even small extra payments add up over time.

Using an online mortgage calculator can help you see how these strategies save money. You don’t have to stick to just one method; choose what works best for you.

Protect Yourself First

Before focusing on paying off your mortgage, ensure you have an emergency fund. This fund will provide a financial cushion for unexpected expenses, preventing you from having to use credit cards and accumulating more debt.

Choose Your Mortgage Term Wisely

When selecting a mortgage, opt for the shortest term you can afford. A shorter term, such as 15 years, can save you thousands in interest compared to a 30-year mortgage. If a 15-year term isn’t feasible, consider a 20 or 25-year term for substantial savings. If you prefer the security of a 30-year mortgage, try to make payments as if you had a 15-year term whenever possible.

Final Thoughts

Paying down debt is incredibly satisfying, and watching your mortgage balance decrease is motivating. Identify what drives you and apply it to your financial goals. With the right strategies and a bit of discipline, you can achieve the seemingly impossible task of paying off your mortgage early.

Leave a Reply

Your email address will not be published.