First Person: Tricks to Pay Down Our Mortgage

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My husband and I owe just about half of what we paid for our $185,000 new construction home. We have lived in our house for about 8 years. Although I'd love to have completely paid off our mortgage by now, I'm still pleased that we knocked out half of the cost of the house. We used little tricks and techniques to pay down our mortgage when we were in our 30s and now 40s. Now that we are at the halfway point, we are debating whether we will keep doing what we are doing.

Owning half a home

Most home-buyers try to put down 20 percent so they can avoid paying private mortgage insurance. Instead of thinking of it as a 20-percent down payment, I visualize owning one-fifth of my home outright or pre-paying for 360-square feet such as the front bedroom, bathroom and hallway. Now, I visualize that we own half of our 1,800-square-foot home. Picturing myself as owning my kitchen, dining room, two bedrooms and bathrooms motivates me to pay off the remaining mortgage balance as quickly as possible.

Refinancing, but not on paper

Even though we refinanced from a 30-year mortgage to a 15-year mortgage, we pretend that we still owed the same amount. My husband set it up to pay our mortgage automatically through online banking. We only owe about $900 a month, but we keep our automatic payment set at the higher amount so our home will be paid off sooner. By refinancing to 2.75 percent, we can accelerate the process of paying off our mortgage because we owe less in interest.

Counting down each thousand

A lot of people suggest homeowners pay off their mortgage early by making extra payments such as tax returns, unexpected windfalls or bonuses. We found the most difficult challenge was staying motivated to use any extra money for the mortgage instead of spending it. One trick that worked was to take a stack of sticky notes and write down the balance on the top piece of paper with each paper below reflecting an amount $1,000 lower. Each time I pay down $1,000, I reward myself by throwing away the top piece of paper to reveal the new amount that we owe.

Setting target payoff dates

Another tip we used was to set a target payoff date. We wanted to pay our mortgage for no longer than 15 years from the time we first moved in. I completely disregard the date when my loan is supposed to be paid off, according to the amortization charts. After setting my target date, I periodically double check that I'm paying the correct amount extra by either calling my mortgage company directly or using mortgage pay-off calculators.

Although financial experts often argue that it's foolish to pay off a home early, I think it's all about what makes me feel comfortable. Moreover, I read a Market Watch article that cited a Harris Interactive Survey on the topic. Forty percent of people 55 and older said the best money move they made was paying off their mortgage. Although paying off the mortgage isn't a top priority with most people my age, I like to plan for the future. I'm completely sure I will never regret making paying off my mortgage early so we will carry on with our plan for as long as we are financially able to make higher payments.

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