Hello :) Just curious if anyone had bought their home then paid it off within a couple years and if so how? Or do you know the things you actually have to do to have it paid off VERY quick?
We did two extra payments this year, I'm hoping to do three next year.
No clue how to pay it off quickly. Make more money? My hubby is going to try to increase his salary in the next few months. All his extra earnings will go towards the mortgage and a move fund (this housing market sucks, we either need to build up yet another 20% down payment or a build fund).
My uncle did this. When he paid his bill, there is a line where you can add extra amount to go towards the principle of the loan. Then he would call a week later to verify that they had applied the extra to the principle of the loan and not the interest. My mortgage also has this option on the payment slip.
It all adds up, so even in you can only send an extra $100 a month, that's an extra $1200 a year that you save on interest.
My mortgage also has a bi-weekly option where you pay half the mortgage amount every 2 weeks, and save on interest that way.
Just keep in mind that even when the mortgage is paid off, you will still owe monthly for insurance and taxes.
My wife and I did this. We have paid off our mortage once, but almost twice. I know that sounds confusing.
We claimed 2 or 3 deductions when we were allowed to do 6 or 8 or 10. Then we took our income tax return and paid off bills and put the remainder on the principal of our home. (We ended up with no debt except out home.) We were with in 12 months of paying off our home when my company required that I move. When they forced us to move we had to move to an area that was a lot more expensive.
We started over again and they forced us to move again and again to a much higher area. The last time we had to move was to southern California and that was twice as much. We finally paid off our home when I got a severance package, but I'd have rather kept my job. It was so nice to not have that humongus house payment.
We put a picture frame on the wall. As we paid off the debt on out home we would mark another line on the chart and were at the roof line when we were forced to move. Having that picture and picture frame on the wall was a great mental boost and incentive to save.
FYI: The first time we used our income tax return to pay down the debt on our home about $1100 paid off 42 payments of principle.
Good luck to you and yours.
It's always a good thing to pay off your mortgage as quickly as possible.
We bought our home with a 30 yr. mortgage, then after a few years re-fi'd to a 20.
We were told that on a 30 yr., pay O. extra payment per year, and it will knock almost 10 years off of the life of your mortgage. Just apply 1/12th of your mortgage to the principle payment. More if you can....but adding 1/12th per month is relatively painless.
A few years later we paid off our mortgage completely.
Don't believe people that say you *need* to have the interest write off on your taxes--that's just false information.
I am quoting this off the top of my head but paying bi weekly instead of monthly takes two years off of a 30 year mortgage because you are reducing the principle quicker therefore paying less in interest. I think it is one extra payment a year pulls off four.
Really just get out excel and create an amortization schedule, then tweak the payments to see exactly what every change does. :)
We pay our mortgage payment 1/2 on the 15th, the other 1/2 on the 30th. This cuts down on the interest and is supposed to shave 7 years off a 30 year fixed mortgage. This is what the bank says, so we'll see.
We did. We got to a point where we could double our payments and did it. Then each Tax return we received also put that towards it..
So nice to not have a mortgage..
Bi-weekly payments work, it's like making 13 full payments a year instead of 12. You pay half your mortgage payment every two weeks, so 26 1/2 payments per year. Paying twice a month isn't the same.
Most major mortgage companies have an "Equity Accellerator" that is what I explained above, but they charge a hefty fee to start it and then a monthly fee to maintain. My suggestion is to take your monthly payment, divide it by 12 and add that to your payment each month. That will do the same thing as paying 13 payments a year. Even if you can pay an extra $50-$100 a month you can greatly reduce your loan term. If you added that 1/12 each time, you'd pay off your loan at least 5 years early which saves you that many years of paying interest.
I haven't done it, but check with your mortgage company about make bi-weekly payments instead of monthly payments. It apparently saves enough on the interest that you pay the house off sooner. Or you can simply pay more toward the principle each month.
We paid off our first home (30 yr mortgage) in 12 years.
We doubled the required payment amount and made sure the extra went towards the principle.
With our 2nd home it's a bit harder to do that, but eventually we'll be able to sell off our first home to wipe out our current mortgage.
In the meantime, we're renting out the other house.
Many are suggesting that you split the payments and pay 2x a month. We enquired with our bank, doing that won't give you any advantage, because the interest accrues once a month, therefore you don't have a lower principle for those 2nd two weeks.
In fact, they will charge you a premium to orchestrate your mortgage payments into bi-weekly ones. We did the math and figured we were better off paying additional principle monthly. Good luck to you.
Our first house was $45,000, and in ten years of paying on the $40,000 we borrowed, we paid over $40,000 in INTEREST!!! Made me sick!!! =( Our payoff was still $37,000.
Our situation is a little different, because we had a house fire that burned our home to the ground. But with our insurance, we were able to pay off the balance, and were actually able to pay cash for our "new" home.
I just want to say that it is an incredible relief to do this. After our home burned down, my husband was seriously injured, leaving him partially disabled (he's not paralyzed, but cannot work 40 hours a week).
It's an incredible feeling that when money is tight, you never have to worry that you are going to lose your home by repossession.
As far as a penalty, if it is a couple thousand dollars even, you will still benefit because of the other several thousands of dollars you will save in interest.
Someone who really pushes you to do this, in a very motivating way, is Dave Ramsey, if you are interested in being brainwashed about getting debt paid off. =) We're debt free and loving it!
We're working on having our house paid off within the next 5-7 years. We pay bi monthly as others mentioned. There is no penalty for us to pay early but you do need to check and make sure what your rules are.
I heard that if you pay off your house when the bill is due, all those years, that you actually pay 3 times what you bought the house for. If you have extra money every month, pay it on your house to help keep from paying so much. But you need a savings account first for emergency.
First and formost make sure there is no penalty for paying it off early, then if not make any extra payments you can afford, but make sure the extra payments go towards principle, not only will you reduce that but youare reducing interest amount alaso, its like taxes the less you owe the less there is to have interest on.
I have a software that does it for me. It's an interest cancellation software. Best thing I ever purchased. I have 28 years left on my mortgage and the software will have it paid off in 10.4. Actually it will have all my debt paid of then, not just the mortgage. I have tried so many other things and this by far is the best! So far I have saved over $15,000 in interest because it helped me pay off debt earlier. AMAZING.
We're in the process of paying of our 20 year mortgage early. We make 2 extra payments a year. We should have it paid off in 6 years.
I think it's harder to do in the north but if you can help it don't ever spend more than double your income on a house. So if you make 50K a year, then the max you should spend on a house is 100K. If you can do this you should be able to pay it off easily in 15 years or sooner. Of course, having a huge down payment is awesome too, but we didn't have that. We didn't put any down. Good luck! It's CRAZY when you figure out how much one spends on interest in a mortgage...I hope we get ours paid off super early, aiming for 5 years. In Tx though houses are cheap so it's way easier!
It really depends how much you owe and how much you make, and if you can afford to double or triple your payment in a month. On top of that are you still putting some money into your saving account? It makes a huge difference if your house cost is 200k and your mortgage payment is $2,000 a month or 2 million and $15,000 mortgage a month. Good question and great replies.
We haven't done it yet - but we are in the process of paying it off in 15 years instead of 30...we have about 7 years left.
We are not rushing to do it.
it is possible by applying extra payments to the loan - however when you send in the extra payment, you need to tell them to apply it to the balance, NOT THE INTEREST.....many companies will just take the extra money and apply it as a payment...
Not sure who you have your loan with. We are with Wells Fargo. Our is a fixed rate loan with no pre-payment penalties after the first 24 months...
Have you looked into investing that money? The return on investment may outweigh saving the interest on the mortgage. Just a thought....
My husband and I paid off the mortgage on our home in 7 years. We could have paid it off in 6 1/2, but we were then pregnant with child #2 and his ultrasounds indicated a chance that he might have Downs Syndrome so we waited until a few months after he was born to paid the last bit of the mortgage. Praise God he did not have DS or any other health concerns so we didn't need extra money for his care.
My husband and I have always lived on his salary even from day 1 of our marriage. I worked 3 years 9 months until our first child was born and I became a stay at home M.. So we used my salary to pay ahead on our mortgage and for a few fun trips to Europe. So, to answer your question, to pay off your mortgage you must buy a house you can truly afford, put a sizable payment down (at least 20%), and pay more on your mortgage than minimum monthly payment. It can be done, but it takes diligence and wisdom when purchasing your home. Nurse Midwife M.
We paid off our 15 year in just over 10 years (last week). We paid additional principal with every payment. We had no prepayment penalties.
I personally have not done it. We were headed in that direction, but then decided to refinance and do some home improvements.
It's not very common any more, put some loans/mortgages actually do have penalties for paying off early.
The easiest way is to make additional principal payments. Most companies will allow you to add any additional amount you want to your montly payment, just be sure to indicate what the extra is for when mailing in your payment. The additional payment does not need to be sent in with your monthly payment, you can make a principal payment whenever you choose, just make sure you indicate this when sending in your payment.
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