How to Pay off Your 30 Year Mortgage in 5 Years: The Ultimate Guide

how to pay off your thirty-year mortgage in five to seven years yes it can be done and this is the ultimate guide to help you do it here we are our very first rental property hey everyone I'm Clayton Morris I'm Natali Morris and we are a long time real estate investors and we left our day jobs a number of years ago thanks to passive income and this whole channel is devoted to helping you become financially intelligent and financially free and we know a thing or two about this pay down your mortgage strategy number one we wrote a whole book about it it's called how to pay off your mortgage in five years you can see the link in the description below but we've employed this strategy multiple times and when you are done watching this video today my hope is that you will have a deep understanding about how exactly to do this and pay off your mortgage in a short amount of time now this is an aggressive goal of course because when you went to the bank you signed for a 30-year mortgage most likely right so think about it how you could be out from underneath this huge weight this huge debt in your life in a much shorter time so what we teach you to do is like I said it's aggressive but even if you employ small bits of this advice in small chunks over time you're still gonna not pay a mortgage for thirty years you're still gonna take a whole bunch of years off of that commitment we promise you that all you have to do is educate yourself and stick with the plan you can live mortgage free plenty of people do it and I love one of the reviews of our book which is even if I employed 10% of this strategy I will still save myself tens of thousands of dollars so again to Natalie's point even if you only use a portion of what we're about to talk about here over the next few minutes this could dramatically change your life now let's go back to the beginning here and talk about the mortgage okay because step one in this whole process is to really understand your mortgage and most people believe that you know getting the home they live in and getting in debt with cars that's the way to build the American dream and we now know that owning the house you live in having that big mortgage is not an asset it's not putting cash in your pocket it's taking money from you every month no it's what keeps you from being financially free it's probably the thing that you stress out about the most when say you pop a tire you have a big unexpected expense you're like oh no how am I gonna pay your mortgage right so we want you to educate yourself on what it is you're committed to inside of that mortgage so that you understand how to attack it because you can really only slay the dragon you know right so if we in the book we deep dive this and we'll talk about it now like understanding what's in your mortgage most people really don't and I we don't say that to be smug I know because that's how we were I always assumed that the mortgage was just made up of all kinds of bits and bobs like fees for this or fees for that right it's actually a bit more a bit less complicated than that when you really take a look at your statement and a lot of people think well I can afford the payment so therefore I can afford to live in that place well ok that's one way to look at it but it's kind of a myopic way to look at things because you're committing yourself to paying the bank a lot of money in order to live in that place right you're not actually paying for the place itself of your mortgage is paid in the bank to take a risk to lend you money to live there right so what goes into your mortgage I mean you have to have this financial intelligence so if you feel like I want to skip to the the meat of this no this is the meat right here we're getting to the meat and really understanding that what goes in your mortgage principal interest your tax payments or private mortgage insurance PMI there's a lot of these things that are hidden inside of your mortgage you might not know about do you know how much interest you're currently paying per month most people just think they're writing a blank you know check to their mortgage and it's one payment well guess what for the first seven or eight years of you paying that 30-year mortgage you're really only paying interest only paying money to the bank interest is just a fee so in the book we talk about how interest is basically just the fee that I am taking as the lender for giving you money it assures that I am going to get money back every month and I make money on taking a risk of lending you a big chunk of money now we don't make the point that the banks shouldn't make this money of course they should right we need banks to be around because that's how our economy works but you don't have to pay them forever this exorbitant amount you control how much you pay them because you say I need 30 years and they say okay well then we'll make this much over the 30 years but if you went back to them and said actually I decide I only want 10 years they would say ok fine we need less money because we'll get our money back sooner right it's an exchange so what we're encouraging you to do is give them back their principal faster so that you don't pay them their fee for 30 years and then over time that saves you thousands and thousands of dollars in interest so what you need to understand step 2 in this process is that the main enemies in your mortgage are tools you time and interest principle is not your main enemy principle is what you and the bank agreed that you would borrow in order to buy the house right but because you've agreed to pay the bank back in so many years and because you've agreed for an interest payment to be put on top of every month's payment your two main enemies are interest and time attack either one of those and the amount that you're paying to the bank shrinks and shrinks and shrinks the amount of principal that you have to pay back shrinks and shrinks and shrinks until eventually you own the house with zero dollars owed to the bank so you could try to attack these things individually you could try to go after interest individual you could try to go after time individually but guess what unless you have a time machine right if you have if you have a time machine you could go after time you could get creative about going after this right you could reduce refinance you could shrink the size the length of the mortgage etc but it's not until you go after principal which allows you to go after both things simultaneously right interest and time so going after principal is the one thing that's the one dragon that you want to slay more than anything else is going after that principal balance so let me give you a visual right you've got a two-headed dragon hmm interest and time principle is your sword it's the only way you can slay those things does that make sense I thought that was pretty clever that is pretty sure I know you know so people will say and let's put these disclaimers in there right now because I can already see the common thread exploding on this video saying well great Clayton and Natalie why wouldn't you just make that one extra payment you know per year to your mortgage right right and that is one way to use that sword but it's not only one way but it's not a great way why because you're still only making that one extra payment and you're not you're you are reducing interest in time but you're not doing it in the ways that we really lay out in the book which is doing it multiples multiples multiples right and oftentimes people will write that check and they're making one extra mortgage payment I see it all the time just make one extra mortgage payment just make one extra mortgage payment but what you're doing you're still paying the interest on it you're not paying the principal you're just making one extra payment that really helps you very very little right if you don't use those dollars that you've dedicated even to that one extra payment let's say you make an extra payment of $1,000 per month and you just send it to the bank with like Bank of America written on the cheque and you send it in they're gonna take their interest payment out of it unless you specifically write to them that this is principal only so think of principal again as your main sword right it's your sledgehammer it's your magic wand principal is how you attack the mortgage it's your it's your Elder Wand what Harry Potter fans write what we do is give you an amortization sheet which you can download right underneath this video yeah we're gonna give it to you for free just right below this video free gift it's nataly's built this great ammeter ization calculator download so it's right below this video so grab it so we give you this amortization sheet you have to use you have to use a spreadsheet for it because amortization is very complicated and so what you do is just like play with it put extra money in the extra principle only column and you'll see how much the amount of interest you are committed to to the bank over time just shrinks and shrinks and treats so what we teach you to do in the book and what we hope to do in this in this show as well is find ways that you can make larger principal payments well where are you gonna do that right you find some inheritance you shake down a bank right that pennies you shake down a bank that defeats the purpose cuz you're robbing the same Bank you own don't rob a bank so step 3 in this process is to find ways to attack the principal in order to kill these two main enemies right so we teach you to evaluate assets you may not have already thought of that can go into your mortgage for instance you may have equity in your home that you can borrow against from the bank at a lower interest rate that gives you access to a big chunk of cash that you can then put into your principal payment of your amortized mortgage at a more favorable interest rate than this one big way this is one of my favorite ways okay and we in the book deep dive the HELOC strategy the home equity line of credit strategy we're not going to deep dive it here because you might not have a HELOC you might not have access to a HELOC and therefore it might go over your head but just know that when you have one type of banking product which is a HELOC it's different than your 30-year mortgage it's a different type of interest almost treat it like a credit card it's using simple interest it's structured differently and so by you taking that home equity line of credit yes the interest rate might be different but again it's a different banking product and even if you took 5,000 out of it or 10,000 out of it and you zapped it at your principal balance watch that amortization calculator it's amazing what will happen now this is the primary way that we have paid down mortgages using this strategies in the home equity line of credit strategy so this is just one simple way that you can do it and then you pay back that HELOC over a few months from your payroll or from wherever you make your money your revenue and then you do it again you fire another $10,000 right at the principal balance of this primary mortgage and boom-boom-boom it just keeps dropping like a hammer right so it's hard to illustrate these numbers to you and in a show just talking about numbers we hope your eyes don't glaze over but we do encourage you to read the book and watch how the numbers do shake themselves out now another way to find some cash that you hadn't thought to use is a 401k loan what a 401k I'm told you're never ever supposed to touch your 401k so the marketing around the 401k would have you think that it is an amazing investment vehicle well once you become pretty good at evaluating finances you'll see a 401k is not actually so amazing it's a pretty mediocre way to partner with the government to invest in the stock market that's basically what a 401k is okay so you probably have some money there that you could loan to yourself now think about this you can become the lender so me Natalie lends me Natalie the mortgage holder let's say ten thousand dollars out of my 401k and I commit the mortgage holder Natalie commits to paying back the 401k holder Natalie let's say four percent over the term of two years right so now I'm paying that note back to myself I'm making money in my 401k because I'm paying myself back but I've also taken that money and used it as a sword against our two main enemies interest and time I've shrunken my mortgage a ton is that a word shrunken shrunken yes okay a shrunken head I've shrunken my mortgage a ton and the interest that I'm committed to and I'm now making money on a different law instead of paying that interest to the bank I'm paying that money to me Natalie the 401k holder right so now there's a couple extra little tidbits can I give some tidbits here on the 401k okay little nuggets goodness I love this strategy okay because the 401k is yours right it's your money sitting there in an account set up with your your place of employment and you're loaning it to yourself it's not a withdrawal so you're not getting a penalty right that's different when that's not we're talking about it's all very very easy to do usually within one or two clicks on your website fidelity or Wells Fargo whoever holds your 401k and the same thing works for military retirement accounts as well I know because we've heard from a lot of you who are in the military who have done this strategy so thank you for sharing that with us it's just as easy to do when you do that you're paying yourself back to Natalie's point and you're paying the interest to the Bank of you not paying it to Bank of America or some other bank you're paying it to yourself okay the beauty of this is that the federal government only allows you to contribute a certain amount of money every year to your 401 K right it's like seventeen thousand five hundred or whatever it is whatever the max is when you're watching this video they adjust it all the time there's a max that you're allowed to loan to put into your 401 K every year okay by doing this strategy when you pay yourself back with that interest you can actually exceed legally though the IRS standard and the limit for the 401 K federally for the year so this is pretty creative thinking when it comes to finances because most people think I pay my mortgage I contribute to my 401 K and I sort of just like keep treading water and then hope that I'm rising right in the grand scheme of things well okay that is one way to do it a lot of people live their lives that way fine right but what we're encouraging you to do is think creatively and think sort of like I like to think of it like a teeter totter like put your options on two sides which one do I make more money on which one do I pay more money on and then make informed decisions now if you don't have a 401 K or you don't have equity in your home right so these options are not going to be very good for you then that extra payment every year is a great option we also we like to we're so obsessed with it that knocking down that mortgage that we find any little chunk of change and we put it towards principle so we use a cash back rewards card through capital one when we get cash back in the form of a check they send it in the mail and it's usually like four it's a super random number like four hundred and eighty eight dollars right I take that to the bank and I put it down on principle because I like to see how much that 488 dollars that I didn't earn right I just spent money like I normally would and got cash back now goes towards shrinking my principal I like that kind of thing is such a high so Natalie's done a lot of research on these credit cards one that we use is that capital one card will have a link below in the description because I think we use like the spark card for business rewards so we get their business or yours is different though you can't take business rewards as and just like use that cash for your personal mortgage because you'd be taxed also we have a venture card also we have a personal venture card for our person yeah so when we do that don't use business rewards dollars personally it's not allowed you can use business rewards for travel for personal travel and that's fine there's no way for the government to really get at that yet now that I've given them the idea but the link is below to the card that we use the venture card that we use so you get the cash back it's a lot right but you're even that like that five hundred dollar payment or that seven hundred dollar payment that you're firing towards the principal balance again play with the ammeter ization calculator and you're gonna see holy smokes that maybe just took four months of payments off of my balance sheet it's crazy how that actually works another way that you can you know pay down some extra principle is to honestly I mean I know this seems like duh but no it's not like look around your house there might be an old camera an old TV there might be an old PlayStation there might be something that you could sell on Craigslist or Ebay and make a thousand dollars nobody does that way anymore like your Facebook swaps or Facebook swap right we've sold like furniture on Facebook swaps I sold off a bunch of ties and like you know ties Network yeah a couple hundred ties that I had or a couple hundred dollars I sold off like 20 or 30 ties you know and so you can look around there is stuff that you are hoarding right now that you could probably make one thousand two thousand three thousand dollars on in your house and pay down the principal balance on your mortgage and I guarantee you you will save months and months and months of payments just by gathering up and selling stuff on the local swaps I mean you can get really obsessed about this every now and again I sit and I think to myself I don't want to own all this junk I want to sell it to somebody else and then I like I really think about how this is not a performing asset I don't want it in my house and I get crazy and I yell at Clayton for like why do we own three pressure washers or whatever right and then you start to think about like how can i generate cash to turn it into my sword right that is principle payments to slash your two main enemy I mean another big one is this tax refund the tax refund so everyone gets excited right oh we're gonna get money back from the IRS for taxes this year no that's not something to get excited about right number one if you're getting money back in your taxes then you're doing it wrong okay if you're doing your taxes wrong you don't have a great CPA but if you do get money back from your tax returns don't celebrate and go have a Super Bowl party or whatever you're gonna do or go out to dinner take that money that thousand dollars or eight hundred dollars or four thousand dollars and fire it right at your principal bang your sword yeah I mean babysit some kids most Aman's shovel snow for the neighbor whatever you know like for me it's just any kind of like extra that we have not committed to our budget I make sure that's going Kim right into our two main enemies is interest in time so step four in this process is to then to work this ammeter ization sheet you know sit there and study it and start to see as narrowly said ways that you can creatively just start firing in that principle but I got to make it your beast if you know what I mean like make it your beasts not a know that it and just go in there and pretend like put some numbers in and be like oh my god if I didn't like if I cancel my cable bill boy if you still have cable if you still use a cable box then yes get rid of cable and start streaming you could even use YouTube TV for crying out loud and save like a hundred bucks a month use that extra hundred bucks a month that you're not paying for your cable bill to fire it right at your principle balance and put that in your amortization sheet just start to think about it right now a lot of times when you are making your mortgage payment you can mark on line X you're a principal for this much I want to encourage you to double check that the banks have actually applied that to principal a lot of times they don't and never call them up or even I've even walked in and check and I've had it highlighted and circled principal only and they see they I see later they still took interest out of them and then you have to call up and scream and so just keep on top of that yeah be diligent about it so thank you so much for subscribing to the channel we hope that you found this useful and again a few links we want to mention below there's that free ammeter ization calculator which is below get rabbit it'll help you tremendously that spreadsheet also a link to our book how to pay off your mortgage in five years it is a best-seller on Amazon so thank you so much for making it a best-seller this is what this channel is all about helping you create financial freedom in your life we'll see you next time everyone

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Views: 234,318

Keywords: financial independence, Financial freedom, Pay off debt, Morris invest, Clayton morris, real estate investing for beginners, how to pay off your mortgage, pay your mortgage off, the ultimate guide, how to pay off 30 year mortgage in 5 years, natali morris, how to pay off your mortgage in 5 years, how to pay off your 30 year mortgage in 5 years, pay mortgage with heloc, pay mortgage faster, heloc, velocity banking, mortgage, heloc strategy, capital one, pay off your mortgage

Id: 21WUsFpGMio

Length: 20min 46sec (1246 seconds)

Published: Mon Oct 21 2019