The answer is different for each homeowner. Your earning power, expected future earning power, savings, and even your hobbies will all have an impact on how you choose to pay your mortgage. The good news is that there really are simple, effective tactics for paying off your mortgage early — as long as you're willing to stay committed to the process.
One of the best ways to pay off your mortgage early is to make sure that your mortgage fits your finances well before signing on the dotted line. Free mortgage calculators are very useful when shopping for a mortgage. If you're already locked into a mortgage, don't worry, there's still plenty you can do to more quickly own your home free and clear.
- Cut Expenses, Increase Savings – The number one tip for paying off your mortgage early is both pretty simple on the surface but sometimes easier said than done. It's sort of like saying that to lose weight, you need to burn more calories than you take in. We all know that it's true, but cutting expenses and increasing savings requires a lot of planning, discipline, and persistence.
- Earn More, Save More – One of the best options to cut expenses will come when you earn a raise at work or move to a higher-paying position. It's natural to want to splurge a bit, but you've already proven that you can live comfortably on your prior salary. Keep the same budget when you get a raise and put the difference toward paying off your mortgage.
- Focus on Frugal Fun – There will always be little sacrifices when you want to pay off a mortgage early, but that doesn't mean you have to forego fun. You'll just want to be smart about how you invest your entertainment budget. Focus on affordable hobbies, plan vacations on a budget, and try replacing a few dinners out with creative, home-cooked meals. It's all about finding the right balance.
- Plan Your Financial Future – If you're not on a first-name basis with a financial adviser, now is a great time to change that. A financial adviser can help optimize your budget, minimize your tax load and identify ways to lower spending that won't cut into your quality of life. Investing some of your extra savings can also help with paying off your mortgage early.
- Extra Payments – The ultimate payoff of saving more and spending less is the extra payments you'll be able to make, which will help you pay off your mortgage early. These payments add up quickly, and with a little planning, you can start making extra payments soon after buying a house. Your financial adviser can help you optimize your extra payments to make paying off your mortgage early as efficient as possible.
While the goal of saving more and spending less holds true for all homeowners interested in paying off their mortgage early, there are many different ways to reach that goal after buying a house. Research, experiment, and find the savings tips that work for you. The benefits of owning your home free and clear are worth the effort.