I'm not a magician or financial expert, so please use common sense when reading this article. This is simply my journey to cut years off my mortgage and over $100,000 in interest.
My wife and I bought our home about two years ago and like everyone else, were looking for a great deal. We found the perfect home for our family...besides the $50k in renovations and five plus months it took to do so. Of course we had savings, but we didn't have the $50k that we needed to make the home perfect, so we went with what is called a Homepath renovation mortgage. It was quick and easy (thanks to my lender), but the rate on renovation loans isn't the best. So last year we started on a mission. "Operation Mortgage Payoff" was now in full effect.
First thing we did was refinance our home to A) Get a lower interest rate and B) Get rid of PMI. PMI is additional mortgage insurance that is added to your mortgage when you have less than 20% equity in your home. Many loans now won't even allow you to remove PMI after you have 20% equity, so check with your mortgage company. Thanks to our upgrades and remodel, our home appraised $30k more than when we initially purchased the home.
With the savings from the lower interest rate and getting rid of PMI, we were actually able to switch to a 15 year mortgage (even lower interest rate), and our payment was virtually the same. I don't remember the exact amount, but I think we may pay about $60/month more. All this meant for us was eating out twice a month less (family of five). If you need a good reference, Rob Wolfe - PrimeLending 937-313-4082 is incredible.
BOOM! We cut 15 years off our mortgage! 😀
So that was cool, but I knew we could do more. So I started researching ways to pay off your mortgage faster, and while there are certainly extreme ways to do it in as little as 5 years (use google), my wife and I still like to have a life, so here are the things we did that have literally had ZERO effect on our lifestyle:
- Started paying the mortgage biweekly. We pay the same amount, just every two weeks instead of once a month.
SAVINGS = $7k in interest
- Switched from cable TV to streaming only. Our cable bill was out of control at $150 for cable and internet. We recently switched to DirecTVNow for $35/mo +internet $40/mo. and SAVED $75/mo.
- Called and shopped around for homeowner/car insurance. If you haven't bundled these yet, you probably should! Just by calling around, we were able to SAVE $850/year - $71/mo. (Blake Vanover - MetLife is who helped us 937-748-9600)
- Shopped for a different electric and gas provider - http://www.energychoice.ohio.gov ...not a huge amount, but SAVED $17/mo.
- Started using Kroger ClickList - it's free for the first three uses, and $5 thereafter that saves us way more. This may seem silly, but planning what we are getting at the grocery has done the following:
A) We don't have to cart around three kids that either want everything they see and/or hate grocery shopping B) We don't buy things we don't need ($10/trip x 1 trip/wk = $40/mo.) C) Saves at least an hour per week D) We eat out less (about 4 meals less as a family per month at $25-35/meal = $100-$140/mo.) E) We are able to actually use coupons. I hate going through coupons, but Kroger's app/website allows you to click coupons for stuff you're buying anyway, and it adds them to your Kroger Plus card so when you check out it automatically applies the savings (about $50/mo.) F) Fuel points save us an additional $20-35/month and even more in the summer when they offer 2X fuel points. Total Kroger SAVINGS = $210-$265/mo!
- Just this month started using an app called ibotta. Again, I hate coupons but the app is super simple to use. We get our groceries, come home and see what coupons are available for what we bought, scan the barcodes, scan the receipt and that's it. It gives you cash back in the form of gift cards (your choice), but we are Amazon shoppers, so we're saving money we're spending anyway. First month in and we're at about $20 in SAVINGS!
Our goal is to apply the above savings directly to our mortgage and pay it off as fast as possible. Your goals might be different, but what could you do with an extra $453/month?
TOTAL SAVED = $127,782 in mortgage interest and cut 21 years off the loan! Mortgage FREE in less than 9 years!
Even if your numbers are slightly or way different. This handy calculator can show you the impact of paying a little bit more and paying bi-weekly.