Getting Rid Of Your Mortgage….

I’m closing on a house this week, and looking forward to becoming a homeowner all on my own for the first time at age 44 (if you’re wondering, I’m newly divorced). This marks the first time that everything will be in my name only and falling solely on my shoulders. It’s an exhilarating feeling.

It’s also a terrifying feeling. When you stop to consider that signing on the dotted line for a home means making a thirty year commitment (ten years longer than my marriage lasted!), the pressure you feel can almost be palpable. The joy of home ownership is somewhat tempered by this new responsibility, one that isn’t going to go away and will come due like clockwork every month whether you are working and have the money to pay or not.

So what’s the answer? Well, as a writer, I would hope for a couple of book deals with enormous cash advances, but since I’m not King or Clancy, I won’t be holding my breath on that one. That said, there are still ways you can reduce the amount of time that you have a mortgage hanging over your head and your life.

Pay a little extra on the principal every month. Whatever you pay over and above your regular payment will go towards your principal, the money actually owed on the property. Paying $25 or $50 extra a month will add up before you know it, and can end up taking years off of your mortgage. If you’re wondering, an extra $50 a month ends up taking three years off a thirty year mortgage…..and saving you a ton of cash.

If you can’t make additional payments each month, set a goal towards making one large on every year. Some people use their tax return for this purpose. Again, you’d be surprised at just how much this adds up.

Bi-weekly payments have become another popular option. While it may be more involved to make two payments a month as opposed to one, over the course of a year it will mean a full extra payment being made, which could take from five to six years off your mortgage.

You can also look into paying next month’s principal this month. Of course this adds to your monthly payment, but it also means that you will be paying down the principal at an accelerated rate, which of course saves you money over the long haul.

Whenever you come into some money, be it through tax return, bonus from work, something you inherit, etc, resist the urge to take a vacation or buy a new car and spend the money on your mortgage. Any lump sum that is applied towards your mortgage will be a benefit. Sometimes this can end up being one of the more fun and creative ways to pay down your debt.

You can also refinance your mortgage for a shorter term, going from a thirty year plan to a fifteen year plan. Rates will be much lower, although obviously your overall payment will be higher. But if the thought of being debt free in a decade and a half appeals to you, then maybe the higher payment is worth it.

Of course there is also a lot to be said for simply staying the course. If you have managed to lock into a mortgage payment that you can handle, that allows you to keep enough money in your pockets for you to be able to have a life, then there is no shame in going with that. You know what to expect and you know when it will be paid off.

The benefits of paying off your mortgage early are clear, the most notable of which is financial freedom. You’re no longer in debt, at least not for a house. Getting rid of a mortgage payment can potentially free up nearly a third or more of your take home pay. Stop for a minute to think about what could be done with that much additional money every month.
The obvious by product of this would be less stress, less that you have to be responsible for every month. Even if you were to lose your job, the repercussions wouldn’t be as damaging as if you had a mortgage payment hanging over your head with no way to pay it.

The ability to get ahead financially. If you choose not to quit your job or allocate what was your mortgage payment into other avenues, just think how much money you could sock away in a very short time. If your mortgage was $1200 a month and you manage to bank that for a year, you’d end up with $14,400 in the bank. Righteous bucks.

So don’t worry about frugal, just get creative. Look for ways to get the mortgage out of your life early on, then go and enjoy the fruits of your labor.

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