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How to Pay Off Your Mortgage Early

So, you’re eager to pay off your mortgage early? That’s a great financial goal to set for yourself!

Not only is there huge freedom in being completely debt-free and living in a paid-for house, but it’s also a great way to build wealth—getting rid of your house payment leaves you with a ton of extra money each month to save for retirement. In fact, the average millionaire pays off their house in just 10.2 years.1

But even though you’re dead set on ditching your mortgage ahead of schedule, you probably have one major question on your mind: How do I pay off my mortgage faster? That’s why we’re going to walk through exactly how to pay off your mortgage early so you can reach your goal and become a debt-free homeowner.

Let’s dive in!

How to Pay Off Your Mortgage Faster: 5 Tips

Now, let’s take a beat and look at some other financial goals you need to prioritize ahead of getting rid of your mortgage. Before you start paying off your house faster, there are four things I want you to do:

  1. Pay off all your consumer debt (think credit cards, car notes and student loans).
  2. Build an emergency fund worth 3–6 months of your typical expenses.
  3. Begin investing 15% of your income for retirement.
  4. Start putting money aside for your kids’ college (if you have kids).

If you haven’t checked all four of those boxes, then that’s where you should focus your attention for now. But if you have accomplished those goals, you’re ready to start taking steps toward paying off your house early. Exciting!

Let’s go over five not-so-secret but super helpful tips for making that happen.

1. Make extra house payments.

Okay, you probably don’t need me to tell you that every dollar you throw at your mortgage payment puts a bigger dent in your principal balance. And that means if you make just one extra payment annually, you’ll knock years off the term of your mortgage—plus save thousands of dollars in interest.

How does that work? Let’s crunch the numbers. We’ll say you have a $240,000, 30-year mortgage with a 7% interest rate and a monthly payment of $1,597 for your principal and interest. If you made an extra payment just once every quarter, you’d pay off your house nearly 15 years early! That would mean cutting the length of your mortgage in half and saving a whopping $184,000 in interest along the way.

If you want to see how much time and money you’d save making extra house payments in your specific situation, check out our free mortgage payoff calculator.

But before you start making those extra payments, let’s go over some ground rules:

  • Check with your mortgage company first. Some companies only accept extra payments at specific times or may charge prepayment penalties.
  • Include a note on your extra payment that you want it applied to the principal balance—not to the following month’s payment.
  • Don’t get sucked into paying for a fancy-schmancy mortgage accelerator program, like biweekly payments (more on those later). With focus and intentionality, you can hit the same goal all by yourself.

2. Make extra room in your budget.

You may have read that last section and thought, But I don’t have any extra money to put toward my house payments! Hang on—you can probably find more money in your budget each month than you realize.

Now, if you aren’t already making a budget every month, start there. Write down your income, list your expenses, subtract your expenses from your income to make sure you aren’t overspending, then track your spending during the month to make sure you’re staying on target.

Use the mortgage payoff calculator and see how fast you can pay off your home!

If you are living on a budget—or once you make your first one—here are some adjustments you can make to free up money for paying off your house early.

  • Lower your grocery budget. Chances are, groceries are one of the biggest line items on your budget aside from housing—especially if you have a family. So think about some ways to cut back, like changing stores or shopping sales and in-season produce.
  • Stop eating out so much. Okay, I’ll admit this is a tough one for me because I love eating out. But going to restaurants is always more expensive than cooking at home—sometimes a lot more expensive. Cooking at home just 2–3 more times per week can save you a ton in the long run.
  • Do an insurance coverage checkup. An independent insurance agent who can shop rates from multiple providers may be able to get you a cheaper price than what you’re currently paying for your coverage. You can start that process by connecting with a RamseyTrusted pro.
  • Cancel some subscriptions. These days, it’s super easy to rack up more subscription services than you actually use. Figure out which streaming services you can live without, cancel them, and put the extra cash toward your mortgage.
  • Cut back on online shopping. I know, I know . . . Online retailers like Amazon are super convenient with two-day shipping and one-click ordering, but all those orders can add up fast. And if we’re really honest with ourselves, we probably know we don’t need all that stuff in our digital cart. (Dang it!) Cutting back will give you margin to make bigger payments on your mortgage each month.

Get the right mortgage from a trusted lender.

Whether you’re buying or refinancing, you can trust Churchill Mortgage to help you choose the best mortgage with a locked-in rate.

Connect With a Mortgage Expert

3. Refinance (or pretend you did).

Another way to pay off your mortgage early is to trade it in for a new loan with a lower interest rate or a shorter term (or both)—like a 15-year fixed-rate mortgage. Let’s see how this would affect our earlier example—a 30-year $240,000 mortgage with a 7% interest rate.  

If you kept the 30-year mortgage and made all your payments on schedule for those three decades, you’ll pay about $335,000 in total interest over the life of the loan. But if you switch to a 15-year mortgage with a lower rate of 6.5%, you’ll save close to $200,000—and you’ll pay off your home in half the time!       

Sure, a 15-year mortgage will come with a bigger monthly payment. But if you can comfortably fit it within your monthly budget (meaning the payment is at or below 25% of your take-home pay), it’ll totally be worth it. And don’t forget, you’ll likely have boosted your income or lowered your cost of living from the time you first took out your mortgage—in that case, you’d definitely be able to handle the bigger payment.

If you want to refinance to a mortgage you can pay off fast, talk to an expert at Churchill Mortgage. Our team at Ramsey has worked with Churchill Mortgage for years, and their mortgage experts will show you the true cost—and savings—of each loan option. They’ll also coach you to make the best decision based on your budget and goals.

Connect with a mortgage expert you can trust!

If you already have a low interest rate on a 30-year loan, don’t worry about refinancing. Go ahead and treat your 30-year mortgage like a 15-year mortgage by upping your monthly payment.

4. Downsize.

Downsizing your house may sound like a drastic step. But if you’re determined to pay off your mortgage faster, consider selling your larger home and using the profits to buy a smaller, less expensive house.

With the profits from selling your bigger house, you may be able to pay 100% cash for your new home. But even if you do have to get a small mortgage, you’ll still reduce your debt and wind up with lower payments.

Remember though: Your goal is to get rid of that new mortgage as quickly as possible. So use the smaller balance and lower payments you get from downsizing to accelerate paying off your home. This isn’t an excuse to pocket money in the short-term and delay your payoff.

If you think downsizing your home makes sense for your situation and you’re ready to get the process started, your first step should be hiring a top-notch real estate agent who can help you sell your current house and buy a new one.

You can find one in your area through our RamseyTrusted program, which matches you with pros our team has vetted to make sure they understand how important it is to buy a home you can afford. They won’t pressure you to consider homes that’ll bust your budget.

Connect with a RamseyTrusted agent today.

5. Put extra income toward your mortgage.

You know what a lot of people do when they start making more money from a raise, promotion or bonus? They start spending more money, and it can happen automatically if you’re not paying attention. This is a sneaky little trend called lifestyle creep.

It’s not surprising that so many fall into that trap, since it’s really tempting to see extra income as an opportunity to spend more. But if you want to pay off your house early, one of the most effective steps you can take is to treat your income boosts as chances to save more.

To get really intense about knocking down your mortgage payment, put all your extra income toward your home loan. That means bonuses, raises, profit sharing, holiday gifts—yep, all of it. It’s more than okay to treat yourself from time to time (I still want you to enjoy your money for other things), but don’t let the temptation of lifestyle creep take over.

One of my favorite Bible verses, 1 Timothy 6:6 (NIV) teaches, “Godliness with contentment is great gain.” If you keep an attitude of contentment, you won’t need to increase your lifestyle to feel joy and satisfaction about where you are in life—you’ll already have it.

And in this case, your “great gain” could wind up being the opportunity to pay off your mortgage faster.

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You’ve Got This!

You know what happens when you pay off your house and the bank doesn’t own it anymore? The grass feels different under your feet when you step onto the lawn. It’s the feeling of freedom.

And if you follow these five tips over time, I know you’ll be able to experience that feeling. You’ll pay off your mortgage ahead of schedule, and you’ll get debt out of your life for good. Think about how good that’ll feel!

If you want to know when that day will come, our free mortgage payoff calculator can give you an estimate based on how much extra money you're putting toward your house each month.


Next Steps

  • Download a budgeting app, map out your income and expenses, then find where you can cut back to put more toward the mortgage.
  • Use the mortgage payoff calculator to see how much sooner you’ll pay off the house.
  • Talk to your lender to see what route works for you: making extra payments, increasing your payment amount, or refinancing.
Try Our Calculator

Frequently Asked Questions

If you claim the mortgage interest tax deduction, paying off your mortgage early will lead to a higher tax bill. But you’d actually pay more in interest by keeping your mortgage than you’d  save in taxes.

Let’s say you pay $10,000 a year in interest and you fall into the 25% tax bracket—well, you’d only get a $2,500 tax deduction. It’s a nice perk while you’re paying off your mortgage, but it’s a terrible reason to intentionally keep your mortgage. That would be like trading a dollar for a quarter.

Whether your home is paid off or you owe money on it, your homeowners insurance policy will cost the same. By law, you aren’t required to have homeowners insurance if your home is paid off, but not having insurance is a horrible idea. Your home is your largest asset, and you want to make sure it’s protected.

You might have a pile of cash sitting in your 401(k), but it’s never a good idea to use your retirement money to pay off your house. First off, you’re going to need that money if you ever plan to retire. And second, you’ll be hit by taxes (at your withholding level) and a 10% early withdrawal penalty. So you’ll lose 30% or more of your money before you can even put it toward your mortgage. Bad plan!

A biweekly payment plan can be a good idea—but never pay extra fees to sign up for one. Remember, there’s nothing magical about them. The real reason it helps pay off your mortgage faster is because the smaller biweekly payments add up to 13 full-size payments over the year instead of the standard 12.

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Rachel Cruze

About the author

Rachel Cruze

Rachel Cruze is a #1 New York Times bestselling author, financial expert, host of The Rachel Cruze Show, and co-host of Smart Money Happy Hour. Rachel writes and speaks on personal finance, budgeting, investing and money trends. As a co-host of The Ramsey Show, America’s second-largest talk radio show, Rachel reaches millions of weekly listeners with her personal finance advice. She’s appeared on Good Morning America and Fox News and been featured in TIME, REAL SIMPLE and Women’s Health, among others. Through her shows, books, syndicated columns and speaking events, Rachel shares fun, practical ways to take control of your money and create a life you love. Learn More.

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