Pay Extra Principal on Mortgage

This may seem crazy coming from a mortgage guy, but I’m super excited about my newest goal: paying off my mortgage.

While there’s no doubt that a mortgage is great for purchasing a home or consolidating debts, I also know it is not something I want as a permanent fixture in my life.You can dramatically cut years off the length of your loan by paying extra toward the principal on it. I have extra money deducted automatically to avoid making a monthly decision about it. I see it as a “forced savings plan.” Plus, it gives me a sense of liberation to know I am not on an eternal rat wheel.

I encourage you to grab a pen and paper, draft a budget, pay off all consumer debt, and then devise a plan to pay off your home in 15 years or less. It does not require as much as you might think to do this. Below is a scenario where by paying an additional $300 a month on a $100,000 mortgage loan, a homeowner could shave 16 years off the life of his or her mortgage, ultimately saving more than $44,000.

Loan Amount Interest Rate Monthly Mortgage Payment Extra Payment Total Monthly Payment Years to Pay Off Loan Total Paid Total Saved
$100,000 4.25% $491.94 $0 $491.94 30 $177,098.40 $0
$100,000 4.25% $491.94 $300 $791.94 14 $132,783.53 $44,314.87

*The following example does not include taxes and insurance. It is based strictly off the loan amount.