How to Pay Off Your Mortgage Early (WITHOUT Refinancing)

pay off mortgage early

If you’re concerned about how much money you’ll have in retirement or want to enter retirement debt-free, now is the time to start thinking about how to pay off your mortgage early. 

Another reason to get the ball moving sooner rather than later is that we’re getting ready to move into a higher interest rate environment come 2022. 

Let’s face it, we don’t know what the future will hold with regard to taxes, cost of living, etc. 

But we can count on these things continuing to rise – the question is how much. 

Any action you take today to bring down your principal will help your future self. That you can count on. 

In this article, we’re breaking down 7 strategies to pay off your mortgage early without refinancing. 

What’s Wrong with Refinancing? 

We’re not saying it’s bad to refinance. In fact, it may make sense for your particular situation. 

However, we’ve been in a low interest rate environment for years now – the lowest in history. 

As we start moving out of this environment, and as the Federal Reserve starts raising rates (which, in their December 15 press conference, they said they plan to do in 2022), your mortgage rates will also rise. 

Why would you want to refinance and lower your payment by $100, only to add $7,000 or $8,000 in fees and closing costs added to your principal – just to lower your rate a hundred bucks? 

Especially when you could follow these 7 simple strategies to pay off your mortgage early…without refinancing. 

#1 Make Extra Mortgage Payments

You’d be amazed how making a few extra mortgage payments can quickly chip away at your principal. 

If you make just one extra mortgage payment each year, you could take 8 – 11 years off a 30-year mortgage. Take your monthly payment and divide it by 12. Then add this amount to your mortgage payment each month.

Or, make one extra mortgage payment each quarter. 

Let’s say you bought a home within the last 2 years and have a 30-year mortgage. If you made an extra payment each quarter, you could take 17 – 20 years off your mortgage. 

#2 Make Bi-Weekly Payments

Instead of making one payment a month on your mortgage, consider paying a half payment every 14 days. Make the first payment in full, and then make another payment 14 days later. Keep doing it every 14 days. 

By the end of the year, you will have made 26 half payments, and knock off serious interest. 

Doing this could save 13 – 15 years on your mortgage. 

(Hint: This can also work for car payments.) 

Look online for a bi-weekly payment calculator to see the interest you could save. 

Note – Be careful of companies charging a fee for this. Don’t pay a fee. Check with your mortgage company to see if they allow this. Some don’t. 

#3 Round Up Your Mortgage Payments

Rounding up your monthly mortgage payment can make a big dent in the principal owed. 

If your mortgage payment is $1,249.75, consider rounding it up to $1,300 each month. This will make $603 extra dollars paid on the principal each year. 

#4 Use Unexpected Income for Extra Lump Sum Payments

If you get a windfall of cash from an inheritance, tax return, or a work bonus, make a lump sum payment down on your principal. 

I just had a client who inherited money from her mother. The money was just sitting in a savings account. 

The option was to invest the money or pay off her remaining mortgage. She was already in retirement, so it made sense for her to pay off the mortgage and enjoy retirement debt-free. 

#5 Prioritize Your Mortgage Payments 

Make it a priority that your mortgage payments come first. Take a look at where you’re spending your money. 

If you’re buying a $6 latte five days a week each month, that’s $120 you’re spending monthly. If you have a $1,200 monthly mortgage payment, you could make an extra full monthly payment using your latte money. 

#6 Get a Side Hustle 

Get a side hustle and take that money and compound the payments on your mortgage. 

Teach online a subject you are good at, consult businesses with your expertise, or walk or babysit dogs. The key is to do something you enjoy. 

#7 Rent Out an Extra Room or Space

You’d be amazed at what you can rent these days. See what you can rent and then take these funds and compound the payments on your mortgage.

  • Airbnb – If your city allows this, rent out an extra room.
  • Extra stall in your garage – People that don’t have space to store their collector cars or household goods are always looking for space to rent.
  • Extra parking space on your land – Companies look for parking spaces that are easy to access. If you live near a stadium, lease out your space. 
  • Wine cellar – People pay a lot of money for storing their wine. 
  • Your pool – Rent it out by the day for events.
  • Nice gazebo, landscaping – Rent this space out for professional photographers.

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