The faster you pay off your mortgage, the more money you’ll have for…whatever you want! Here are the steps we took towards our last house payment.
“Focusing on paying off the mortgage has [several] benefits, both financial and emotional,” writes John Heinzl in “The Best Investment? Paying Off Your Mortgage” in The Globe and Mail. “It’s a forced savings plan, and it gives you a goal to work toward. When you finally pay the mortgage off, you’ll have far more financial flexibility – to invest, save for your kids’ education, cut back to part-time work, live on one salary instead of two, take a vacation, or countless other things.”
My husband and I made our final mortgage payment last month, and we’re planning to sell our house and buy one that costs twice as much. Yes, we’ll have another mortgage…but when we pay that mortgage off, we’ll have enough money to retire!
Here’s how we made our mortgage payments disappear…
5 Steps to Your Last House Payment
If you have money to pay off your mortgage but aren’t sure if you should pay off your mortgage fast or invest in other financial options, read Is Paying Off the Mortgage a Good Idea?
And if you have no money (like we didn’t) and want to make your last house payment, check this out:
Consider switching to a new mortgage broker or bank
Mortgage brokers don’t always offer better interest rates and loan terms than banks. If you aren’t happy with your current mortgage lender or if you’re buying your first home, shop around for brokers and banks. Learn about adjustable rate mortgages versus fixed rate mortgages, play with the mortgage calculators, and be realistic about what you can and can’t afford.
Save money for the mortgage renewal
Some mortgage loans are renewable every few years; if you’re renewing your mortgage, try to make a large lump sum payment. A $10,000 payment would be fantastic, but every $1,000 or $5,000 helps. Make sure your mortgage lender accepts extra payments (not all do!) – and that you’re not getting charged for making extra payments.
Put financial windfalls, work bonuses, etc towards your mortgage
I’m a full-time freelance writer and blogger; I don’t earn a lot of money, but some months are better than others! Sometimes I receive magazine assignments that pay $1,000 or more. At first, we weren’t sure what to do with those little “bonuses” – and we invested it in stocks and mutuals for awhile. But, the economy crashed and we decided to pay off our mortgage…which I think was the best financial decision we’ve ever made.
Increase the frequency of your mortgage payments
We paid about $2,000 towards our mortgage every two weeks. It was financially demanding…but I’ve learned that saving up to $500 a month is not as difficult as it sounds. Can you increase your mortgage payments, and make payments more frequently? It’ll go a long way to paying off your mortgage faster. But, make sure your mortgage lender doesn’t penalize you for making extra loan payments.
Review your mortgage interest rates regularly
Don’t ignore your mortgage! Revisit your interest rates and mortgage terms every quarter; stay up-to-date on interest rates and new products or services that could save you money. If your lifestyle changes (eg, you get a raise at work, or develop an extra source of income), then you might want to make changes in your mortgage payments.
For instance, you may have started out with a lower-rate adjustable rate mortgage when you first bought your house, but you may want to switch to a more long-term affordable fixed-rate mortgage after a few years.
For more tips on paying off your mortgage, read 5 Ways to Save Money Every Month While Paying Off a Big Mortgage.
Do you have any questions or thoughts on being free from mortgage payments? Please comment below…