How to Payoff Your Mortgage ASAP!

After becoming debt-free, my current financial goal is to payoff my mortgage early. This is a huge undertaking and can be very daunting! But when I sat down and calculated how much interest I’ll pay for the next 29 years, I was shocked. It was $251,817 in interest alone! That’s just craziness!

I’m now determined to payoff my mortgage as soon as possible.

Here are a few ways to pay off your mortgage early. Try some or all of these!

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  • Get Motivated and Make it a Goal: Once paying off your mortgage early is a personal goal, you’ll get motivated to make it happen ASAP. You will literally find ways to save more money such as making analyzing your budget in more detail or canceling cable. Or you’ll find ways to make more money such as finding a side job.
  • Consider a 15-year mortgage instead of a 30-year mortgage: I recently refinanced from a 6.9% interest rate to a 4.5% interest rate and SHOULD have switched from a 30-year mortgage to a 15-year mortgage. But I didn’t want to be tied to an extra $400/month payment. In reality, the 15-year mortgage would have been affordable and a much better financial decision. It would have saved me $132,280 over the life of the loan.
  • Biweekly Payments: Making biweekly payments is one of the easiest ways to pay down your mortgage early. Call your bank and ask them to set it up and then it’s automatic. With biweekly payments, your payments are made every other week instead of every month so you will end up paying 1 extra payment per year. This 1 extra payment will be sent as a principle payment, which will pay down your mortgage faster.

Savings: Making biweekly payments on my 30-year mortgage will allow me to pay off my mortgage in 22 years.

  • Pay an extra $200 per month: Look at your budget and determine a fixed amount you could reasonably pay each month as an additional principle payment. Make it reasonable so you will continue to make this extra payment for the duration of the loan. If it’s TOO ambitious, you might cancel the payments after a couple of months.

Savings: Making biweekly payments and an extra $200 per month will allow me to pay off my mortgage in 16 years.

  • Send an extra principle payment per year: After setting up that automatic $200/month, consider setting up one extra principle payment per year that’s equal to your monthly mortgage payment. This could come from any extra, unexpected income like bonuses, gifts, an inheritance, or tax refund.
  • Use your whole tax refund as another principle payment: If you’re still getting a tax refund, you could simply put the entire tax refund towards your mortgage as a principle payment. However, this requires a plan. For YEARS, I planned on doing this and NEVER did because I always found something else that “I needed.” Make it a habit that you’ll keep.
  • Check your progress monthly: Motivate yourself with an online tracker or log into your Bank’s website and check your progress monthly. Seeing your mortgage go down quickly will motivate you to keep making sacrificing and making those extra payments!

Here are 6 of my favorite articles this week. I hope these articles motivate you to save more money and maybe use that extra money to pay down your mortgage early!

  1. Frugal Rules: It’s Not What You Make, It’s What You Keep. This is an excellent article that will inspire you to budget and save more money.
  2. Life And My Finances: How To Trick Yourself Into Saving. This is a detailed article about making saving effortless and easy to save more money.
  3. Making Sense of Cents: What Bad Financial Habits Do You Have? Part 1. We all make some mistakes with our personal finances, this articles discusses some bad habits in detail.
  4. Your Daily Finance: The Basics on How to Build a Better Budget. This is another great blog on making a budget. If you don’t have a budget, know is the time to make one!
  5. Wise Bread: 15 Essential Life Hack That Will Save You Time in the Morning. These are easy and quick ways to save time, which leads to saving money.
  6. Digital Spikes: Save Money with Online TV: How to Get Free Cable. Similar to my article about cancelling cable, this article talks about getting free TV.

About Monica Iannacone
Monica Iannacone
Monica Iannacone is a personal finance writer who received a B.S. in International Business and an MBA from Jacksonville University. She writes about Saving, Budgeting, and Frugal Living on her blog, www.MonicaOnMoney.com. When she's not writing, she enjoys yoga, surfing, and running on the beach. Follow her on Twitter @MonicaOnMoney or Like MonicaOnMoney on Facebook.

18 thoughts on “How to Payoff Your Mortgage ASAP!

  1. I have a 140,000 mortgage that I am paying accelerated weekly payments of 200 a week at 2.99%. I try to double up these mortgage payments once a month if I can, but some months that have 5 weeks, that’s already 1000 towards the mortgage. By doing weekly accelerated I have taken a 25 year mortgage down to 18 years. So far, in the last year, I’ve paid an additional 6 payments of 200 but it’s tough ! Math isn’t my strong suit, so can you tell me how much I am taking off the mortgage in interest savings as well as time over the long run by paying 200 more a month?

  2. These are good tips. I paid off my mortgage in 2 years by NOT doing automatic bi-weekly payments. Instead, I paid my mortgage as usual and whenever I had extra money (once, twice, three times a month) I would transfer that to my mortgage company separately. Every transfer gave me more motivation to keep going. It reminded me of my goal. I wouldn’t have gotten that reminder if the money just came out automatically.

    • Mike, I love this idea of not setting up automatic payments an forcing yourself to have the discipline to make payments! I might try this for the extra boost of momentum. Good for you! That’s very impressive. I have about 4 years left of my mortgage, congrats on paying off yours :)

  3. Monica, Great article and some good tips. After being $150,000 in debt (not including the mortgage) at the young age of 55 (right!!) we finally turned our finances around – so it is never too late. I am 62 and we just paid off our mortgage December of 2012. We had a good interest rate of 4.25% and had over 50% of our payment going toward principal but once Robin and I decided to pay off the mortgage we went for it using all of the ideas you mention above. At the very least you should pay off ALL debt with the exception of the mortgage and then make sure that it is paid off by the time you retire or set a goal of age 62 like we did even though you still enjoy working. The grass we walk on even feels different now that we have no mortgage payment. It is easy to Give, Save and Invest over 50% of your income when you have NO payments.. Keep up the good work Monica. Jeff and Robin

  4. Monica, I’m with you on getting rid of the mortgage asap. One of the ways I stay motivated to pay mine down is with an amortization spreadsheet. I wrote about it at my site last week, but basically you can see every payment in an Excel spreadsheet and see how adjustments to individual payments can take months and years off the life of the loan. I’ve been at it for 4 years now, only 21 months to go!

    Imagine The Freedom Of Owning A House With No Mortage

  5. These tips are OK, but if you want to get serious about it and obliterate your mortgage, check out my piece on how to get rid of your mortgage: http://pretired.org/pretirement-how-to/how-to-get-rid-of-your-mortgage/
    I suggest a 10-year loan combined with some savings and refi techniques to accelerate the pay-off even faster.

    • Thanks for sharing! I read your article, its great for those who can afford those larger payments up front. Definitely worth looking into for financial peace in only 10 years!

  6. Ok Monica, most people aren’t in the position to start paying off their mortgage early. However, you’ve given some great guidelines for people to reduce their mortgage that are very easy to accomplish. I think people should focus on making one extra payment to principle per year. People should try to take a whole payment and apply that towards their principle, and this can be done very easily either through bi-weekly payments or tax refunds. If they accomplish this, they will reduce their 30 year mortgage by 7 or 8 years (Without a huge reduction in their quality of life)

  7. One great tip I read is to round up your mortgage payment to the nearest $100. So if you paying $923 a month (a figure straight out of my head) then why not make it $1000? It won’t hurt your pocket too much but it should knock a couple of years or more off of your mortgage term.
    Adam @ Money Bulldog recently posted…Why have we stopped questioning inflation?My Profile

  8. Good for you, Monica, for working to kick your mortgage to the curb! We’ll be doing the same once our consumer debt is gone.

  9. Paying off your mortgage early is a very worthwhile goal. When I buy a house I am going to go with the 15 year loan so that I will be forced to pay it off early.
    Alexa recently posted…4 Time Management Hacks: A Cheat Sheet for Making More Time to Do What You LoveMy Profile

    • @Alexa- Exactly! You’re already planning ahead. The 15 year mortgage is the way to go and imagine if you paid extra too on a 15 year mortgage too? Thanks for posting.

  10. Great plan for paying down your mortgage Monica! I am on the same path actually. I hope to have mine paid off by the end of next year. Then it’ll be time to invest some money into real estate! Oh, and thanks for the mention! :)

    • @Derek- Wow, Congratulations on getting your house paid off so quickly! I’m happy for you! I’d love to invest in real estate for some “passive income” once my condo is paid off.

  11. I definitely would consider sending an extra principle payment every year. It would be nice to knock some time off my mortgage to avoid some of that insane interest you referenced!
    DC @ Young Adult Money recently posted…The Weekly Quick Hits RoundupMy Profile

    • @DC- That’s a good plan and will make a HUGE difference in interest. Did you calculate the amount to interest you would save?

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