Hitting your financial goals: How to pay off your mortgage early

Tips and insights from one family who paid off their mortgage ahead of schedule.

how to pay off your mortgage early

Living with debt is not something my family and I want to do. Back in 2011, my wife Nicole and I paid off $48,000 worth of credit card debt — and the feeling of freedom that came with that was incredible.

Afterward, we decided to pay off our mortgage early, too. Once we paid off the home loan we wouldn’t owe anyone a dime, and complete debt freedom was priceless to us.

In 2013, we set a goal to pay off our mortgage and live entirely without debt. In 2017, that dream became a reality. We paid off the $195,000 mortgage on our home in just under four years.

Whether you want to pay off your mortgage in 4 years or 24 years, you can use the same strategies we did. Here’s why we decided to do it, how we made it happen, and our insights on how you can work toward paying off your mortgage early, too.

Making the choice to pay off our mortgage early

As a one-income family (my wife is a stay-at-home mom), I often felt stressed out and worried about my job. If my career ended without warning, our family would have zero income.

Paying off our mortgage simply meant more peace of mind. Besides reducing our immediate financial liability, it was also appealing to me to save money in the long run: we’d be paying less interest over time. We’d also be able to focus on saving more of our income after our final mortgage check was submitted.

How we paid off our mortgage fast

Here are a few ways we paid down our mortgage ahead of schedule — along with input and pro advice from the Wells Fargo Home Mortgage team.

1. See if you can benefit from a shorter mortgage term

When we bought our home, we chose a 15-year fixed-rate mortgage so more of our monthly payment went to the principal. This loan type also helped us get a lower interest rate than with a 30-year fixed-rate loan.

2. Challenge yourself to stick to a budget — and earn more money

My wife and I had a monthly budget meeting (complete with pizza!). Having a regular check-in to make sure we were aligned on our bank account activity was helpful to confirm every dollar was well spent. We cut back on our expenses by shopping at discount grocery stores, eliminating our cable television bill, negotiating other services to a lower monthly rate, and prioritizing free activities over expensive hobbies (think lots of time at the library with the kids).

In addition to cutting back, we looked for ways to make more money. We sold things around our home to generate more cash, I hustled at work to earn bigger bonuses, and I even started a blog to create a new income stream. It helps to get creative when it comes to “making money.” Certain credit cards allow you to apply your earned rewards toward the principal balance.1

3. Know all the ways to make extra payments

There are a few ways to pay more towards your mortgage each year. Wells Fargo Preferred Payment PlanSM can help you arrange payments to match your paycheck cycle, or other personal circumstances. Some ideas to make your payments more manageable include:

  • Schedule your payments for every two weeks instead of monthly. With this method, you make half a monthly payment every two weeks. And since this results in 26 half payments per year (i.e. 13 full payments instead of 12), two of the half payments will be applied directly to your loan principal.
  • Schedule your payments for every week instead of monthly. Similar to the above idea, this method allows you to make a quarter payment every week. Four of 52 quarter payments will be applied directly to the principal.
  • Schedule an added fixed amount to each payment. This method is pretty straightforward: for example, if your mortgage payment is $1,200 each month, you could pay $1,400 instead. $200 per payment — $2,400 per year — will go to your principal.

4. Simplify your mortgage payment process

Set up automatic, recurring payments from your bank account to pay your mortgage. Even if you don’t set up recurring payments, you can set up alerts2 to remind you when your mortgage bill is due or confirm when a payment has posted.

What we learned from the process

Deciding to pay off your mortgage early is no small feat, and your family needs to be in agreement about the lifestyle changes it will take to pay it off ahead of schedule. Review your income streams, play around with a loan payoff calculator, and decide on a realistic payoff schedule before you start.

You can also talk to a home mortgage consultant about your plan before you begin, to ask questions about your payoff and get answers specific to your loan.

Finally, don’t forget to celebrate along the way! Paying off your mortgage 1 year early or 10 years early is a lot of work and a big deal to achieve.

Written by: Kali Hawlk as told to by Andy Hill.

Simplify budgeting by paying your mortgage automatically with the Preferred Payment PlanSM options from Wells Fargo.

1 – Rewards redeemed as a credit to a qualified Wells Fargo mortgage, loan or credit product are applied toward your principal balance. You must still make regularly scheduled payments.

2 – Sign-up may be required. Availability may be affected by your mobile carrier’s coverage area. Your mobile carrier’s message and data rates apply.