3 Hacks to Pay Off Your Home EARLY-Paying Off Your Mortgage

paying off the mortgage early can we even do that welcome to the next episode of pajama drama welcome back kate why is this series called pajama drama the whole reason this was created was because in the mornings i get up really early before i have to go to my nine to five and this is when i let all the creative thoughts start to bubble up for the channel while i'm sitting in my pajamas drinking my coffee and i have all these fresh ideas first thing in the morning and then bam i am rudely interrupted by having to go to work then i have to put my thoughts aside write notes down furiously trying to remember what was i thinking about so i can talk to you guys about this later today we're talking about how to pay your mortgage off early i'm gonna get right into the juice the three ways that i'm going to share today on how to pay your mortgage off early if you're just here for the tips take them and scram but if you want to hear some extended thoughts on when this might be the best plan of attack and when it might not be stay till the end as you guys know i am brand new to this this is my first year ever owning home so i'm gonna share with you one method i don't plan on using one method i am using and one method that i might use should the opportunity arise the first method you can use to pay off your mortgage early is bi-weekly payments the whole idea behind this is there are 52 weeks in a year if you do bi-weekly payments you will end up making 26 half payments which will equal 13 full payments instead of the 12 you would if you did it monthly this will mean you will be making an extra full mortgage payment every single year and therefore shaving off some time spent paying off your mortgage while i see how this mathematically is effective this is not the method i am choosing to use instead i'm going to do the next one that i'm going to share with you the method that i am currently using is making an additional principal payment each month when i pay my mortgage so i pay my mortgage and then i add an additional amount every single month to work toward paying off my mortgage early right now i'm currently paying an additional hundred dollars per month toward my mortgage if you want to know the impact that this will have over the length of your loan there are some awesome calculators online my favorite one is calculator.net when i punched in my numbers my loan amount my interest rate and the calculation if i pay an additional hundred dollars each month the end result would be i will shave off three years and six months off the length of my loan i will be able to pay off my mortgage three years and six months early and save over twenty one thousand dollars this got me thinking okay so if i'm doing currently one hundred dollars what would happen if i could scrounge up two hundred dollars i pop those numbers into the calculator and this is what i found if i pay an additional two hundred dollars a month on top of my regular payment 200 toward the principal that will reduce the length of my time paying off this debt by six years and four months in the end i would save close to 38 000 and then just for giggles i said huh what if i could punch in 500 is there even a way i could save 500 each month and if so what would that look like if i were able to scrounge up 500 a month and put that toward my principal each month that would take off a whopping 11 years 11 months almost 12 years off the length of my loan and save me almost 70 000 so obviously the 500 is a stretch but just think about what that hundred dollars can do think about what you spend a hundred dollars on per month if you didn't spend it on that and you put it toward the mortgage to me that is worth it the third way is a one-time lump sum payment toward your principal obviously you do the math on that you will also see that that is a way to get your mortgage paid off a little sooner if you get a stimulus check if you get your tax refund back if some kind of money comes into your life by chance by luck for any reason you could consider taking that amount that you didn't necessarily need you weren't depending on it it's money that is in addition to what you already need to pay your bills and reach your financial goals this could be an option to put it toward your mortgage and pay off your mortgage sooner those are the top three ways that i wanted to share with you that i think are very reasonable and very realistic to work on and work towards to pay off your mortgage early the other way that i'm not going to talk about much but i just want to mention it because i know when we talk about this topic many people are going to bring it up and that is to refinance your loan to a lower rate you would get a brand new loan that reduces the interest and replaces your old loan i was very aware of this going into purchasing the home i wanted to make sure i got an interest rate that i was comfortable with so hopefully i don't have to deal with a refinance down the road if you're interested in what my interest rate currently is it's 3.25 which i think is pretty decent i know people that got it down into the twos recently maybe down the road this might be something i would consider but as of right now i'm not going to look into that option at this time but if you have a higher interest rate that is something to consider i just know that when i went into buying the house i wanted a low rate and based on the loan that i got that was the lowest i could get based on my credit score which was very good and just what was going on in the market at the time i literally bought the house in june 2020 let's now talk about if trying to pay off your home loan is the path that would be in your best interest right now now remember i'm never gonna tell you what you should or should not do on this channel personal finance as they all say is personal for a reason so you have to do what works for your family but i'm gonna share a couple thoughts on my personal situation that could help maybe illustrate why this is something i'm starting to work towards and reasons why if my situation were a little different why this might not be the most appropriate at this time for me okay so for my personal situation i have no other debt other than the home i don't have any credit card debt that i don't pay off every month i don't have any outstanding student loans i paid all of those off i don't have a car payment because i paid off my car in full so if i had some consumer debt or any other debt besides the home i would probably prioritize paying that off first the second thing is i scrutinized over my faux budget before buying this home to make sure i could afford it if you want to see that video i'm actually going to leave you a playlist down below in the description of everything related to buying the house that i think will be helpful for you if you're interested in this topic including seven things i wasn't expecting when i bought a house so if you're a first time home buyer please check that out because i think it will give you some insight the other thing to consider before trying to pay off your home early is to make sure you have an emergency fund in place i currently do have an emergency fund in place that i've been working toward if i didn't have an emergency fund i would be bulking up that baby to make sure that i have at least three to six months if not closer to 12 to make sure should anything happen you've got a buffer the other thing is not to forget about retirement i'm currently putting about 15 to 20 toward retirement i think it's probably around 17 i did the math a few weeks ago and so that's where i fall between 15 and 20 so if i weren't investing in my retirement i would also consider that before attacking the house me personally so now that i have no other debt besides the home i have an emergency fund in place i have my retirement funds in progress the last thing for me is the home this is something i think about a lot if you saw my videos on when i was paying off the car i was in extreme hustle mode and i feel like i'm always in extreme hustle mode you guys and sometimes it can be exhausting we've talked about this before on the channel but when i'm thinking about trying to pay off the home early like i told you i've been doing a hundred dollars per month which i think is great that's telling me right here in my notes that i'll pay off the home at least three years early but in my mind it's not enough i need to do it sooner than that let's talk about my age for a second when i bought the house i was 41 and i got a 30-year loan so if i actually take 30 years to pay this off 51 61 71 i will not pay off this house until i'm 71 and at face value that number feels unacceptable to me i want to do it sooner i want to attack this i also want to spend money on things that bring me great value for those of you that were wondering i did buy my computer i got an apple computer and i am thrilled it was totally worth the investment for my business for my life but mostly for my business this has been a game changer almost instantaneously and i'm super happy with that purchase that being said i am very calculated i am very intentional when buying anything that is remotely pricey or just really anything that i'm bringing into my home does it bring me value is it worth the money i scrutinize about this maybe too much sometimes but when i get something in my head that i'm gonna pay it off like the car i was like tunnel vision single-minded everything i could to get that and i handed over a check for 20 000 to pay off the car you guys i worked my butt off you guys know this if you've seen my videos i did a part one and a part two on how i did that one was how i decreased my expenses two was how i increased my income so those are the two ways you can do it right either increase your income or decrease your expenses i did both to get there and now thinking forward about paying this house off early it lights a little fire under my butt and i'm not going full force but i'm thinking if i'm starting with 100 can i now push to 200 can i make that happen and if i did it would double the amount of time that would be shaved off in the end and that's intriguing to me what about you have you paid off your home are you trying to pay it off early what was the method or methods you're using currently to pay off your home early i'm dying to know please leave it in the comments so we can read through them and see what's working for everyone in the k-squad buying a house is no joke my friends it's a very big purchase that requires or should require in this case i will say should require a lot of thought a lot of pre-planning please watch my video on the tip that no one talks about when buying a new home and that is creating the faux budget and obsessing about it a little bit to make sure to make sure that you can afford a home before you dive into it there's nothing worse than being house poor you have this great home and you have money for nothing else and you're just barely able to pay for the house i don't want you to get in that situation please watch my playlist on everything related to buying a new house i will leave it in the description so you can click through those i think they'll be really helpful especially for first time home buyers also there's a live video of when i first moved in and i watch it once in a while and i actually cry when i watch it because i was so proud and you guys actually all came in on a live to celebrate with me and it was seriously even when i watch it now it's so emotional to me buying this house especially those of you that knew what i was going through when i was renting it changed everything if you're interested in any of that please click on the playlist to get all the details opportunity cost is a thing and things to consider is it more important that i pay off this or pay off that these are all things you have to consider and run numbers and do the simple math that it takes to know what is the best decision for you and your family take the time to look through it take the time to really be intentional and get the best results you possibly can this is your life you can do this and i'm here to support you if you have questions please leave comments down below and ask away again i'm a new home buyer and i want to share my experience with you and be as helpful as i can but i only know what i know so i'm happy to share the information that i have and offer you guidance on what i've experienced i hope this video was super helpful for you i appreciate you being here if you are new to the channel please hit subscribe for more videos like this hit the bell so you're notified each time i upload i've been uploading a lot more i always upload at least once a week but now i'm two to three times a week plus the live on sundays so if you like this kind of content please join the family affectionately known as the k-squad we welcome you with open arms thank you for watching this episode of pajama drama we'll see you next week bye

Channel: Kate Kaden- Making Frugal Living Fun!

Views: 18,128

Rating: 4.9603176 out of 5

Keywords: how to pay off your mortgage early, pay off mortgage early, how to pay off your mortgage faster, 3 hacks to pay off your home early, 3 hacks to pay off your house early, paying off your mortgage early, pay off mortgage faster, mortgage payoff, debt free, paying off mortgage, paying off mortgage early, mortgage payoff strategies, mortgage free, home loan, bi weekly payments, kate kaden, pay off your home faster, pay off your house, pay off your house early

Id: l8FtdiaD8tI

Length: 14min 56sec (896 seconds)

Published: Mon Apr 05 2021