How to Quickly Pay Off Your Mortgage

If you want know how to quickly pay off your mortgage, whether or not you already have a home or you invest in multiple properties, you are in the right place!

Let’s Make Your Biggest Purchase Even More Worth It

Now, before we begin, I want to clarify that not everyone needs to pay off their home as quickly as possible. If you are investing where the estimated growth percentage (between 7% to 11% according to history so far) yields more money back for you than what your mortgage loan rate is accumulating, your money will grow more quickly investing rather than paying off mortgage loan debt. There are ways to calculate that which I will eventually cover. Here, we focus on calculating how to quickly pay off your mortgage to free up cash and spend the least amount possible in finance charges whether you already have a home or properties or are planning to in the future.

If you feel like you are farrrrrrr off from even thinking of purchasing a home, you still want to do today’s challenge. It is very likely you will want to purchase a home. So, being aware of how much you will need in order to make this purchase, how mortgage loans work, and how to pay them faster will set you up for success when the time comes. Making big financial goals even when they seem impossible, though it may sound counterproductive, is the best motivation for getting through the rougher parts of your journey to financial freedom. As you make sacrifices through the debt payoff phase, they will feel much more worth it as you look forward to accomplishing bigger financial goals like purchasing a home.

So, if you haven’t already, I highly suggest listing your financial goals first. We covered personal financial goals you must make for yourself in your lifetime here, for your marriage here, and for your children here. After listing your lifetime goals, we can determine which of those goals we can accomplish this year. We also covered how to maximize your income here. And, we covered how to begin to set up a budget here. If you haven’t downloaded your free budget template yet, you can do so here now and create a budget for this entire year!

Today, you will also download my mortgage and auto loan calculator here so we can play with some numbers!

If you have any mortgage loans, note the following numbers on the first tab of the Mortgage & Auto loans calculator spreadsheet as indicated (we will focus on auto loans here after your mortgage loans, so leave those tabs alone for now):

• Under ‘Mortgage 1’, in the cell next to “Principal as of”, enter the date of your most recent statement or today’s date.
• If you have 1 or 2 mortgages, note the current principal balance on each of the cells highlighted in yellow (leave the other at 0.00 if you have one mortgage loan).
• What is your annual interest rate? Note the percentages in the cells highlighted in green. Do not add the percentage sign. For example, if your loan rate is 4.38%, just enter the number as 4.38.
• Note the number of payments you have remaining in the cells highlighted in blue. We talked about how to obtain your remaining number of payments here.
• Note your monthly payment due in the cells highlighted in purple.

If you do not plan to purchase another home, skip down to how to pay off your your mortgage loans more quickly.

If you do not own a home, look up the median price for a home in your area (you can check Zillow and Redfin) and the current home loan rate (you can check Bankrate).

Now, go to the second tab on the Mortgage & Auto loans calculator spreadsheet and enter the following numbers as indicated:

• Under ‘Mortgage’, in the cell next to “Principal as of”, enter today’s date.
• Note the mortgage loan total required for your desired home in the cell highlighted in yellow.
• Note the current loan rate percentages in the cells highlighted in green. Do not add the percentage sign. For example, if your loan rate is 4.38%, just enter the number as 4.38.
• Note the total number of payments for the term of your loan (i.e. a 30-year mortgage loan rate would require 360 payments or 30 years times 12 months) in the cells highlighted in blue.
• Your monthly payments will be calculated for you.

How to Pay Off Your Mortgage Loans More Quickly

Now, it’s time to have some fun! Take a look at the “Accumulated Interest” totals noted in the top section of each loan. This is the total interest that will be paid in addition to your principal loan. Isn’t it mind-blowing how much interest accumulates? Now, let’s play around with how this interest total will change if you paid more than your minimum monthly payment on each loan. Imagine you can afford to pay $300 more toward your mortgage every month. Enter $300 in the cell highlighted in red. Now, look at the interest total again. What a difference in paying your mortgage off more quickly, right? Now, scroll all the way down until the minimum payment column is zero. Notice how much more quickly you can pay off your mortgage loan than the original 360 months? Now, select undo (or hold down Ctrl + Z together and release), and go ahead and play around entering different additional payment amounts in the cells highlighted in red. Even entering a small amount can make a difference. Try it! Enter $5 and see what happens. It really puts into perspective how every penny really counts!

I will be showing you how mortgage loan payments will be calculated more precisely into your actual budget by the end of this challenge. An even bigger goal to strive for is to be able to purchase a home in cash. It’s totally possible to do that and I will show you how. To get an idea of budgeting tasks you must be completing on a regular basis, check this video out:

In order to know how to begin to create a budget and how to truly maximize your income and accomplish your financial goals, you must create a budget for your income now in order to use it in the most profitable way possible. So, if you haven’t downloaded your free budget template yet, you can do so here now and create a budget for this entire year!

Remember, after you create your budget for this year, I show you how it all comes together in a comprehensive lifetime budget that takes minutes a day to maintain.

In the next post, we calculate how to quickly pay off your auto loans.

Happy Budgeting!