How to Pay-Off Your Mortgage Early

How to Pay-Off Your Mortgage Early involves discipline and commitment. I know because our mortgage was paid-in-full last month. We took out our mortgage to build our home in 2000. Initially, we had to do a 30-year-loan, as rates were high and our money was not. In 2003, we refinanced to a 15-year-loan. Then, in 2004 we refinanced again for 15 years. The only reason we did this was to lower our interest rate. Yes, we did pay the closing again. However, we felt the rate was well worth it.

The other thing we did was to send part of my check to a checking account at another bank. We did not touch this money for anything other than to pay the mortgage. I actually had more money going to the account than the total amount of the mortgage payment. Each month when the payment was due, I paid almost twice the mortgage payment. I specifically noted on the payment coupon that the extra amount was for principal. This meant that more money was going to pay-off the principal each month. Be sure that you note on your payment what amount you want going towards the principal because the banks will not apply it to the principal. They will apply it towards the next month’s payment.

When the equity in our home built-up to 20%, we told the mortgage company that we would take care of paying our own taxes and insurance. The money going into the mortgage checking account covered the more than the monthly payment, the taxes, and insurance.

By doing the above we paid our mortgage in 11 years! It was roughly a $178,000 or so loan. Remember we did not have the 20% to put down on the purchase. I think we put about 10% down. There are several money experts that tell you to put down 20% or more. This is great advice and if you are able to put that percent or more down please do so. Also, tell the bank that you want to pay your own insurance and taxes. They cannot tell you that you must have an escrow account if you put 20% or more down on the loan.

Because we did not put 20% down we had to pay for private mortgage insurance (PMI). When we refinanced, we paid a tenth of a percentage point more on loan to avoid the PMI. However, by the time we refinanced the next time, we had built-up enough equity to where we did not have the extra tenth of the percentage point or PMI. We also did not have the escrow account. Instead, we had our own account. We had it at a credit union and earned interest on our money. The bank was not earning interest on our money.

You too can pay-off your mortgage early. Put 20% or more down; set-up your own “escrow” account; have your mortgage, taxes, and insurance payment deposited to a separate bank account; and finally, pay more than the monthly payment each month and insure the extra is applied to the principal. Good luck and God bless you on your way to debt freedom.


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