Many people don’t even think of paying off their mortgage early. Or if they do consider it, they decide not to based on a couple of commonly held beliefs: that it’s good to keep a mortgage “for the tax deduction” or that it’s better to “invest instead”.
The thing is, neither of those beliefs are necessarily true. You can both invest and pay off your mortgage, and many people don’t get any tax benefits at all from having a mortgage. We sure didn’t.
So we decided to go ahead and pay off our $95,106 loan amount.
Once we really got started, it took us 3 years of focused effort to pay off our house.
Those 3 years were after we’d already spent years slowly but surely paying off all our other debt first. (Credit cards, my student loan, my husband’s car loan, a home improvement loan, etc.)
How did we pay off our mortgage so quickly?
I’ll answer the normal questions below (technical stuff plus where we got the money), but first let me say this:
It wasn’t by winning the lottery, using some complicated scheme, or making biweekly mortgage payments.
In fact, the real answer isn’t very exciting.
But that’s good because you don’t have to be lucky or some kind of personal finance whiz to pay off your house early. What you have to be is committed.
So how did we pay ours off?
We “just” prioritized our wants and needs day after day by budgeting.
If you’d like to do the same, here’s a free printable budget you can use for that.
Prioritizing meant building up an emergency fund, and then sticking to our long-term financial goals even when life threw in monkey wrenches like health issues and a car accident.
(That emergency fund is critical, because you need a cushion in case of something like job loss, which we’d both been through in the past.)
Yes, all that takes time. But life-changing good things do.
Of course, there’s more to it than that.
Things that made the process go faster
A couple things did speed the process up a tiny bit, so I’ll go over those here too.
But really, NOTHING helped us pay off the mortgage early as much as prioritizing and staying focused on our goal. Those are the most important things, by far.
We didn’t have a 30-year mortgage.
We initially took out a 20-year mortgage. So maybe it was a mindset thing even then: we didn’t want to owe on the house forever, and 30 years kinda felt like forever.
Having a shorter mortgage term helps, because the shorter the term, the less interest you’ll pay overall.
(You can get a good idea of how much principal and interest you’ll pay for various lengths in one of these mortgage calculators.)
Refinancing for a shorter term and lower interest rate
We also refinanced a few times before getting serious about paying it off. (Once we even refinanced to get cash out for home improvements, which I totally regret. Ugh! Clearly that was pre-debt payoff.)
And before we even started tackling the mortgage, we refinanced to get an even shorter loan term (a 15-year mortgage) and to get an even better mortgage rate. Lower interest rates DO speed things up when it comes to paying off a mortgage. Then when we were less than a year away from paying off the house, we refinanced one more time for an even better interest rate.
Those last 2 refinances were through Pentagon Federal Credit Union. We went with them because they were having a deal at the time where you could get a TRUE no-cost refinance. Those are super rare. Refinances almost always cost you something (sometimes quite a bit!) so if you’re considering doing the same you’ll want to make sure it’s truly worth it.
I’m putting this here because we did do it, and people often ask about it, but again, it’s not what made the biggest difference. Changing our mindset and prioritizing did.
Now let’s talk about how we actually went about paying off the mortgage, technically speaking.
Making the payments
The technical details of paying off our mortgage were pretty simple. We first checked to make sure it didn’t have any prepayment penalties. We also made sure we were allowed to make as many mortgage payments as we wanted each month.
Then that’s exactly what we did: We threw as many dollars at the mortgage as we could, as often as we could. We made our extra mortgage payments online and designated them as “principal only”. (That’s important, since otherwise the extra money would have just gone to reduce the following month’s payment amount instead of reducing the balance owed.)
Some months we sent in as many as 8 payments: our “standard” monthly payments of the minimum plus $35, and then other random amounts.
We also obsessed over our progress, tracking how far we’d come and playing out various future scenarios using my debt app. When you’re getting out of debt, obsession is good.
When it came time to make the final payment, we called and got our mortgage payoff amount (since interest is calculated daily) and then sent in the required amount. Seeing that zero balance was worth all the time and effort.
So where’d we get the money to pay off the mortgage early?
We got the money from our regular full-time jobs, taking on extra work, doing odd jobs, working nearly full-time in my side business in addition to my regular job, doing $3-$5 surveys, etc. In short, from anywhere and everywhere we could think to bring in money.
I know there are people who will think “oh, if I made in [fill in whatever number sounds like a lot to you], I could pay off my house too!” or “oh, but I live in a high cost of living area and my mortgage is a whole lot more so this doesn’t apply to me” — but if you’re thinking either of those things, you’re missing the point.
Yes, it can be a huge struggle just to get by at all – let alone to pay off debt – if you’re making very little money. (I’ve been there — having spent a few years living WAY below the poverty level.) And yes, things are more expensive in a high cost of living area.
But you can be in or out of debt regardless of how much money you make right now, and you can pay off your home (and get out of other debt) regardless of where you live or how much you’re starting with.
Because it’s about what you do with your money that matters most. There are rich folks who declare bankruptcy, and there are people who become millionaires on a tiny salary.
How you can do it too
If you’re in a high cost of living area with a more expensive mortgage, maybe it will take you longer to pay off your house. But you can still do it if you want to. And the sooner you start, the sooner you’ll finish.
Maybe you’re barely making minimum wage right now, or you don’t have a job. Things don’t have to stay that way forever. You could ask for a raise, look for a better job, or work odd jobs. (See this post on making extra money for a list of ideas.)
The bottom line is: you can do things to change your current situation if you don’t like it. That may mean making some unpleasant choices, and it will probably take time. It did for us.
We all love to hear about the overnight success story, but the truth is that an overnight success is usually preceded by years of hard work and struggle. Years that are WORTH IT.
So know that every little bit helps.
You don’t have to start out all wild and crazy in order to pay off debt, or have some high-powered job. You just have to start with one change. Our initial goal was to “Pay a minimum of $35 extra per month toward the mortgage”. So we did that much at first, even though it didn’t feel like much. Later, we were able to kick it into high gear. We had more money because we’d paid off our other debt, gotten raises, worked extra, etc.
Once YOU start seeing progress — even if it’s just a little bit of progress — you’ll want to go further. It’s kind of like when you finally lose that first 5 pounds. It feels good, and so you keep at it.
Bottom line for us? We paid off the last $49,500 of our mortgage in less than a year. From a starting point of $35 a month to an ending point of $49,500 in a year is quite a change, but hockey-stick shaped progress is NOT uncommon for folks who have gotten out of debt.
What it takes to get out of debt
Finally, if you wish you could pay off debt (whether that’s your mortgage or any other kind of debt) you’ve got to start by doing something that’s not as obvious as it might sound:
You’ve got to quit borrowing money.
That was by far the biggest step we took in our whole get-out-of-debt journey. And it was the hardest thing to do, in retrospect.
We get so used to using debt for everything — emergencies big and small, things we forgot, stuff we want — that the idea of getting by without it doesn’t even seem realistic.
But it is.
Get creative instead
To quit borrowing money, you have to save money to build up an emergency fund, track your spending, and budget. Not borrowing will probably mean waiting on some purchases, and looking for other ways to buy or borrow things you need. You might even have to do without some things you initially thought you needed.
Once you get the first debt or two paid off, you’ll have more money, which makes everything easier. Things will cost you less, because you won’t be paying interest on top of the purchase price. You’ll feel more satisfied, because instead of sending your money off to your creditors, you’ll get to CHOOSE what you want to do with it.
Becoming debt free — including your house — is totally doable, even if you can’t see exactly how to get out of debt yet. As long as you’re willing to do what it takes and you stick with it, you’ll get there.