When we moved to Texas 3 years ago, we left a paid off home in South Carolina. It had taken us 6 years to pay off that home and the thought of having another mortgage was less than ideal. We decided to keep that house as a rental and take out a mortgage for our new home. We got a 5 year arm and made it our intention to pay off the house within 5 years, and were able to pay if off in 3 years. Here are some of our tips for paying your home off sooner.
1. Get a 5 year arm. No one lives in the same home for 30 years anyways so no need to pay a premium to lock the rate for that long. Our intention was to pay it off in under 5 years but even if we didn't the new interest rate would only affect the amount of mortgage balance left. In that scenario, we would still end up saving tons of money overall.
2. Buy less house. We bought a much cheaper house then we could afford and were approved for. Our home was built 2 weeks proper to us moving into it, is in a gated community, and in an amazing school district. There was no other reason to be spending more simply because we could afford it. Less house means less overall cost as well as less in utilities and maintenance. I was in real estate for 6 years and it always amazed me what people were willing to do to get into a home that they couldn't afford. Couples would argue in front of me about getting second jobs and picking up overtime. What's the point of having a bigger, better house if you don't have time to live in it?
3. Make a large down payment. My husband received a signing bonus and a moving allowance that we were able to use in addition to some savings as a huge down payment. Save a 6-8 month emergency fund and use all other liquid savings to make a huge down payment.
4. Attack the mortgage with everything you got! We kept all of our spending to the bare minimum, with just a small budget for eating out, activities, and travel. Groupon was our best friend when dining out. After paying for all of our living expenses, maxing out our retirement accounts, every single extra penny went into the mortgage. We used any company bonuses or rental income to attack the mortgage even further.
5. Don't furnish the house right away. We brought all of our old furniture with us and even though this house is much larger than our previous home, we decided not to furnish it right away. Just didn't feel right spending money on furniture when we had this huge debt sitting over us. Plus our children are still young and new furniture is just not practical and they enjoy having lots of empty space to run around in.
6. Hold off any upgrades except for sweat equity until after your home is paid off. You shouldn't be upgrading something you don't even own. Keep in mind that upgrades are luxuries that you can't afford when you have debt to repay.
7. Paying off your mortgage and owning your house outright is worth so much more than just money. The peace of mind that comes with owning your home, which is most people's largest asset, is priceless. You know that no matter what else life throws at you, you and your loved ones will always have a roof over your heads. That security is priceless.