How We Paid Off One of Our Mortgages Faster

Mortgage Payoff Story

Table of Contents

According to ValuePenguin, the two biggest living expenses are housing and food.

We significantly cut our expenses, paid off our credit card debt, and are now working on paying off our mortgages. Yes as in more than one.

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The interest rate on our primary home is 4% and the 2 mortgages we had on our condo were outrageous at 6.875% and 9.5%!

My husband bought the condo at the height of the market in 2007 and wasn’t the best with money.

Last year (2019), we paid off the mortgage with the 9.5% interest rate.

Here are the things we did to pay that mortgage off faster and how we plan on attacking our remaining mortgages.

#1 GET SERIOUS

The condo had been a financial headache for us for such a long time, to the point we wanted to sell it at a loss, but couldn’t because we didn’t have enough equity in the property.

Now we are past that point and decided that we want to pay off the condo to create a steady cash flow.

In order to do that we had to get serious and start taking action.

We decided to pay off the mortgage with the higher interest for 3 reasons: 1) Interest was highest. 2) Balance was lowest 3) The bank who we had the mortgage with we despised.

#2 SET A TARGET DATE

We originally came up with a target date of December 2020.

We were only paying $141.27 a month on that mortgage and after crunching a bunch of numbers, that date seemed the most reasonable.

Remember, you can always move that date. In my mind I wanted our target date to be the absolute latest I personally would be okay with.

#3 ROUND UP PAYMENTS

This is something we had been doing for awhile.

We’d occasionally round our payment up to $200 or just $150 (I realize that is not even $9 extra a month, but hey you have to start somewhere).

#4 MADE EXTRA PAYMENTS

This may sound like a no-brainer, but this took some trial and error.

Every mortgage company is different and when you make extra payments towards your mortgage you need to see how they apply it.

You usually can specify that you want it to go towards the principal and not towards the following month’s payment.

With this particular mortgage I found that making several payments a month was NOT as beneficial to us because the mortgage company made sure they got their cut of interest every payment and our extra payments became VERY small. $100 extra wasn’t really $100 extra.

Once I figured that out we made fewer extra payments, but bigger ones.

#5 EARN EXTRA INCOME

Side hustling is in our blood.

We used our extra income to pay the bills, save more, and to go on vacation,

At this point we started taking a portion of our extra income and cash back money and putting it towards the mortgage.

Here are some great side hustles to make extra cash if you want to do the same.

#6 USE WINDFALLS

This one takes discipline, but is another great way we were able to chip away at the mortgage principal faster.

Any “found” money you come across you dump into the mortgage.

For example, when you get your tax return, take most if not all of it and start crushing your mortgage.

When I cut my son’s hair myself I am saving $22. Once that reaches $100 I put that towards the mortgage.

You’ll be surprised how fast your numbers start going down.

Other examples are birthday money or selling unwanted items.

#7 USE A MORTGAGE CALCULATOR/ AMORTIZATION SCHEDULE

By making small tweaks to your monthly payments you can slowly reduce your mortgage payoff date by months and even YEARS.

What motivated us the most was looking at our mortgage amortization schedule.

A mortgage amortization schedule will show you how much you owe, how much of your monthly payments are going towards interest and principal, and when you will pay it all off.

Every time we made an extra payment I would see just how much time was cut off our time frame and how much we would save in interest.

#8 GET FRUGAL

At this point in our financial journey we are already thrifty.

We are always making adjustments based on what is going on in our lives.

When we can we splurge, when we need to spend more, we cut back.

CONCLUSION

As we started making more and more payments I started getting excited. What can I say? I’m a total dork.

If you read my student loan payoff story you’ll know that I made many mistakes back then. I had a lot of money in savings, earning little to no interest.

I didn’t want to make the same mistake I made then.

After many months, we made a joint decision to take some of our emergency fund money and pay off the remaining balance of the mortgage.

By paying off this one mortgage early we saved OVER $5,000 in interest!!

MORTGAGE #2 PAYOFF PLAN AND STATS

Another helpful mortgage payoff tip I didn’t mention is putting your goal into writing.

Here are the stats for condo mortgage #2 as of April 2020.

Original loan amount $89,600

Current loan amount $75,265.82

Interest Rate 6.875%

Maturity Date 12/2037

Previous Year (2019)

Principal

$3,992.05

Interest

$5,407.79

Property Taxes

$3,624.60

This means we’ve only paid $14,334.18 towards the principal in 13 years.

THAT IS SO TERRIBLE!!!!

According to our amortization schedule if we simply pay an extra $100 a month towards the principal we will shave off almost 4 years on our mortgage.

An extra $500 a month would reduce it by 9 years.

I’m not sure how much extra we will be able to afford just yet, but I do know every little bit counts.

Lucky Mojito

Cheers to a better you

How We Paid Off One of Our Mortgages Faster