I'm going to pay off my mortgage early by borrowing 3 smart strategies from people who have done it

  • I’ve been writing about people who paid off their mortgages early, and I’ve since made it a goal. 
  • I’m borrowing the strategies they used, like checking amortization tables and using tax refunds.
  • And, I’m saving up chunks of cash as a cushion before I’m ready to put it towards the mortgage.
  • Did you pay off your mortgage early and want to share your story? If so, email [email protected] to share your story.

After interviewing people who paid off their mortgages years early, I decided to start tackling my own. 

While it’s not for everyone, paying off my mortgage will give me flexibility and opportunity that investing can’t provide, like having a fully paid-off house I can use as an asset when buying my next property. It’s something I can’t stop thinking would be a smart move for me, and I recently made my first extra payment. 

As I interviewed people who had done it, I learned several smart strategies that I’m going to implement myself along the way.

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1. Save up the cash as an extra emergency fund before putting it towards my mortgage

Liz Gendreau paid off the mortgage on her family’s home 17 years early by keeping the money as an extra emergency fund until she was ready to pay it off. When I spoke to her, I immediately wanted to implement this smart strategy myself. 

Since she and her husband wanted to pay off the mortgage to feel more secure, the couple decided to keep their cash in savings until they could pay off the mortgage in one payment. While they saved, the account acted as an extra emergency fund.

“If the funds had been paid to the mortgage company, the only way we could have gotten them out would have been a home equity line of credit or by refinancing again,” Gendreau explained to me.

When it comes to making extra payments, I’d rather follow this strategy than make extra automatic payments to the mortgage company each month for exactly the reason Gendreau shared. While I don’t want to wait until I have the whole balance saved, I’m automating the cash to a savings account instead, and then I’ll put the balance towards the mortgage after I reach $5,000 or $10,000.

Keeping that cash on hand and making periodic extra payments will bring me peace of mind, but also an extra feeling of accomplishment in small bursts along the way.

2. Use an amortization table to keep track of the balance

When I signed for my mortgage, I was given a big stack of paper with a spreadsheet on it. Labeled “amortization table” at the top, I put it into my important documents folder and didn’t think anything of it. 

Then, I talked to Kim Anderson, who paid off her mortgage in two years. She made me want to look again. She and her husband kept a diligent eye on their amortization table as they kept paying down their mortgage. This table breaks down how much you pay in interest and towards the principal with each payment, and Anderson said it was a big help. 

“We plugged in what additional principal payment we could make each month, and it calculated how long it would take for us to pay off our loan based on paying that,” Anderson told me. “We got obsessed with seeing the numbers drop.”

While I don’t think I’ll make consistent extra monthly payments because of the chunking strategy outlined above, checking the table will still be a massive help to me. I love seeing numbers drop, especially when they involve interest. I made my own spreadsheet of the balance and what I pay each month, but after talking with Anderson, I think an amortization table will be invaluable.

3. Put unexpected extra cash towards the principal

Both of my most recent mortgage payoff interviewees agreed that putting tax refunds and bonuses towards their mortgages helped them get ahead. When I got a check from my mortgage company for $1,500 after overpaying on escrow, I knew exactly what I wanted to do with it: put it towards the principal.

I deposited the check to my checking account, and then went straight to my mortgage company’s online portal to make the extra payment. 

And I’m glad I did — it went entirely to the principal of the loan, and brought down the total balance. I immediately noticed a difference on the spreadsheet I keep.

While it was probably the lowest-effort thing I could do, it made so much sense to put money I already paid back towards my goal. And, the two families I interviewed recently are proof that it works.

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