We all love a beautiful home and all the gorgeous furnishings, but the part that isn’t so glamorous is the monthly payment that comes along with it. The truth is, having a mortgage is simply a part of life for most homeowners.
Thankfully, there are a few different ways to pay off a mortgage much sooner, but it takes discipline. Henry and I are proof that it can be done with some hard work and a budget-oriented mindset. It took us around thirteen or fourteen years to become debt-free, but we did it. We would love to share with you all a few tips that you could implement and be on your way to a home that is paid for!
Purchase a Home that is Less than You Can Afford
The very first suggestion I have is for those who have not yet bought a home. Before you purchase a home, make sure you buy under what you can afford. This is a great tip all around because it can be helpful in so many ways. Keep in mind, you will have plenty of time later for bigger and better. You need to work your way up. You don’t want to be house poor.
I remember the first home Henry and I bought. It was very small and needed a ton of work. This was great because it allowed us to afford the payment while having a little each month to make home improvements. All of the improvements we made tuned into equity and we gained a better profit when we sold. We then in return, put this money back into another house.
Maximize Your Down Payment
This again is for someone who hasn’t yet purchased a home. Maximizing your down payment will make your monthly payments less and will also free some up to make extra payments towards the principal. So, if you have the cash, put it somewhere that will be useful.
If you don’t have much to put down, it could even be wise to hold out until you can save more. Bigger down payments will often times reduce interest rates allowing more to go to the principal.
Make Extra House Payments
Making extra house payments beyond your monthly payment can reduce your mortgage a great deal. Any amount you pay other than the monthly payment goes all to the principal.
You can do this in a variety of ways. If you have extra each month, try making a payment every two weeks instead of just once a month. If this is too much, try making an extra payment quarterly. Another idea: If you get a yearly bonus, use it to make a lump sum payment on your mortgage. You can also do the same with your income tax return.
Go Lower Than a 30 Year Loan
Any loan less than 30 years will result in a higher monthly payment. However, a 15 or 20-year loan is so much better if you can afford it. Not only will you get a lower interest rate, but this will also allow you to get your home paid for much sooner!
Chances are, you will probably not miss the extra each month after getting used to it. This is where it will be important to have discipline and put yourself on a monthly budget.
Buy and Sell Homes You Have Equity In
Out of all the tips I have pointed out, Henry and I have lived by this one. Good thing we love remodeling and building homes, right? With a combination of budgeting, a couple of builds and remodels we were able to achieve our goal of having a home paid for along with all of our other debt. But keep in mind, this only works if you are willing to move a few times and put some hard work into each build and remodel.
This is basically how it worked for us: buy or build a home under budget, live there for at least two years (or sometimes 4), sell, then repeat. It’s actually a pretty simple process that works if done properly.
Every home we purchased or built automatically had instant equity due to purchasing under appraisal with remodels and doing lots of hands-on work ourselves when building. Our fourth home was a remodel and it was paid for. We are now in the process of building our fourth new home.
It’s been a long journey with plenty of bumps along the way, but it’s been so worth it!
So, those are our tips. If you have some of your own, feel free to share them in the comments.
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