First Person: We Knocked 8 Years Off Our Mortgage

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My husband and I knocked 8 years off our mortgage while achieving a lower monthly payment. We were able to change our ultimate payoff date by 8 years by refinancing as well as paying extra on our mortgage for the past several years. It hasn't always been easy to spend the extra money on our mortgage, but I don't regret paying down our mortgage. According to a recent article by Bankrate.com, a growing number of people who lived through the foreclosure crisis want the psychological benefit of owning a home free and clear. We have used a combination of strategies to knock years off our mortgage. We purchased our home in 2005, expecting to have it paid off my 2035. Instead, we are looking at a payoff date of 2027 if we just make our minimum payment of about $930 a month. It's worth mentioning, our mortgage payment was actually $1,130 a month when we first purchased our home.

Using a mortgage calculator

I periodically check a mortgage calculator to figure out how much extra I'd have to send to the mortgage company every month to pay off the home by a certain date. I use online banking to send extra payments throughout the month. I contacted my mortgage company so they know to apply the extra payments toward the principal of the loan. Some months I send $10 every other day, while other months I send fewer larger payments such as $100 or $200 extra. Even if I can't afford a larger payment, I find a $10 extra payment here or there is better than nothing at all.

Refinancing to a 15-year mortgage

My husband and I refinanced twice to take advantage of lower rates. We didn't have to pay any money for our first refinance during the Great Recession. We currently have a 15-year mortgage at just 2.75 percent. Because of all the extra money we paid toward the principal, we actually owe $200 less each month on our 15-year mortgage than we originally owed when we took out a 30-year mortgage in 2005.

Making lump-sum payments

One of the most effective strategies we used was making lump-sum payments such as tax returns and small windfalls. According to a Real Simple article, a homeowner with a mortgage of $225,000 who made a lump-sum payment of $5,000 would pay off the home 15 months early. That's assuming the person had a 30-year loan at 4.5 percent. We made sure there was no prepayment penalty when we refinanced, knowing that our goal was to pay off our house as soon as possible.

Rounding up and making it even

Once a month, I use online banking to pay the monthly mortgage bill even though I've made smaller, periodic payments throughout the month. Even though we owe exactly $932, I always round up to $950 or even $1,000. Throughout the month, I check my mortgage balance online through my mortgage company's website. If I find my balance is an uneven $95,213.53, I make an extra payment of $13.53 just to make it "even." Being a little OCD has helped us get out of mortgage debt faster.

Now that we have knocked 8 years off the length of our loan, I'm not as anxious about out financial situation. I know we won't have a mortgage when we are retired since our home will be paid off in our 50s. Paying extra on our mortgage has become a good habit. I expect we will have knocked at least another two years off our mortgage by the time it's paid off just because habits are hard to break.

More from this contributor:

Tricks to Pay Down our Mortgage

I'm Happy in our Smaller Home

Paying Off Our Mortgage Isn't Stupid

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