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Want to own your home free and clear? Andy Hill, creator of Marriage, Kids, and Money, shares why and how he and his wife are paying off their mortgage in 5 years!
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Living Debt Free (Including the House)!
I had my friend and awesome money man Steve Stewart on here a few months ago to talk about what it felt like to own their home free and clear. It’s been a blessing for his family, but he acknowledge that you have to consider what all of your goals and where your mortgage plans fit in.
And when we spoke I was nodding my head, we’ve been chugging along paying off our debts. But now, I’m starting to revisit that idea.
We’re approaching a point soon where our only debt would be the house.
And to us and probably you too, it’s a pretty big deal. No credit cards, car payments, or student loan payments to send out.
So as we review our finances for the year and talk about our plans for the next, we’re going over what our priorities are including what we’re going to do about the mortgage.
How fast do we want to pay it off?
Pay Off Your Mortgage in 5 Years
I recently discovered a couple who ready to pay their off ASAP. Andy, creator of Marriage, Kids, & Money, is sharing their ambitious debt free plan today.
In this episode we get into:
- why you may want to dump that mortgage sooner rather than later
- finding extra money to throw into your mortgage
- how to stay motivated when paying off debt
Hope your enjoy!
If you want to hear from someone who has paid off their mortgage early, listen to my interview with Steve Stewart.
Resources for Paying Off Debt Faster
Want to learn more? Here are some resources to check out:
- 5 Reasons to Choose a 15-Year Mortgage
- Mortgage Payoff Calculator
- The Total Money Makeover: A Proven Plan for Financial Fitness
- The Total Money Makeover Workbook
- Paying Your Mortgage off Early
- 15-Year Mortgage Paid Off in 5 Years
- Paying Off The Mortgage Wasn’t Our First Priority (but we did it anyway)
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We talked a lot of about mortgages and how to prepare to take one on, but there was one big question I didn’t get into earlier this week – deciding on taking on a 15 year or a 30 year mortgage.
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Paying Less By Paying Faster
The big advantage with 15 year mortgages is that they usually have a lower interest rate, meaning over the life of the loan, you’ll be saving money. How much?
To give you an idea, I went to Bankrate and ran the numbers on one of their mortgage calculators.
For a $200k house with 20% down, a 30 year loan at 4.08% you’ll pay $147,235.00; with a 15 year loan at 3.40%, you’ll pay $55,505.00.
Paying Your Mortgage: 15 Years Vs 30 Years
With a difference that huge, you may feel that 15 year mortgages are always better. They certainly can be – depending on your situation.
If you’re trying to decide, here are a couple of questions you might want to discuss as a couple:
- What can you afford?
- What is the state of your emergency fund?
- What other financial goals or obligations do you have?
Don’t forget; just because you have a 30 year mortgage doesn’t mean you can’t pay it off sooner. You can treat your mortgage as if you have a 15 year loan.
You’ll pay slightly more in interest than with the 15-year interest rate, but still significantly less than with the 30-year loan. Then if an emergency comes up and they do, you have room to pause on the extra payments.
Of course – this requires a disciplined approach, so automating those extra payments may be essential for you to stick with it.
Thoughts on Choosing the Right Mortgage
I’d love to hear from you guys about how you’re handling your mortgage and why? If you are going the 30 year route, do you have any plans to pay it off sooner?