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Investing In Real Estate Podcast

Over the last several years, more and more homeowners have become interested in paying off debt, including their home mortgage. This is one of my favorite topics to discuss, and on this episode, I’m sharing everything I know.

You’re going to learn about different strategies you can use, which one is the most effective if you’re serious about making progress, and what you should consider before you start paying down your loan. Click play on this episode of Investing in Real Estate to learn more!

More About This Show

First, why would you want to pay down your mortgage early? Well, there are a number of benefits. Mainly, when you pay down your loan early, you save a boatload of money that you would be paying in interest.

Plus, paying down your mortgage allows you to reduce your overall expenses, build your equity, lower your debt load, and free up funds to use for other purposes. Whether you want to use that money to invest, or you simply want to have less debt, paying off your mortgage can afford you more options in your life.

I’ve been talking about mortgage payoff strategies for almost a decade now, but I’ve noticed this topic gaining a lot of popularity in recent years – this is because the pandemic reshaped the way people think. Data from the Pew Center found that since 2017, more Americans find meaning and value in issues like financial independence.

Now let’s talk about the mechanics of how to go about paying down your mortgage. The first strategy that most people know about is simply paying more. This is obvious, right? Even making one extra payment a year on your mortgage can make a significant dent in your balance. This is a popular strategy – and it can be done in a few ways. You could make a lump sum payment or pay an extra 12th of your payment every month.

Going this route can shave about four to five years off the life of your loan, essentially cutting a 30-year mortgage down to 25 or 26 years.

And then of course, the more you can put toward the balance, the faster you can cut down the time you’re tied down by your mortgage.

But if you’re really serious about slashing the time and interest on your mortgage, then you’ll want to consider the strategy I wrote about in my book, How to Pay Off Your Mortgage in 5 Years.

If this piques your interest, I would encourage you to pick up a copy of the book, because it dives deeper into this concept, and gives you charts, examples, and spreadsheets you can use to look at your exact scenario. At a basic level, this strategy entails using a HELOC to pay down the principal balance on your mortgage.

The reason this strategy works is because a mortgage is amortized, meaning the value of the home is gradually paid off. Typically, on a mortgage, you’re mainly paying off the interest for the first years of the loan, and you don’t make much progress on the principal balance until later. But if you can take a large chunk of cash and fire it at the principal balance of your mortgage, you can cut down on the time and interest of the loan.

No matter how you go about it, paying down your mortgage early requires dedication and persistence. In the long run, it’s worth it if this is a goal you really want to achieve.

What if you have one of those historically low interest rates? Then you might not want to prioritize paying off your mortgage right now. Like anything in the realm of finance, this is a deeply personal decision. You should definitely factor in things like your interest rate, your other debts, and your goals when you’re making this decision.

Another reason why you might not want to pay off your mortgage, frankly, is because it takes a lot of discipline. If you really want to accelerate your mortgage payoff and get it done in five years – you’re going to have to buckle down and get serious!

Not only will you have to make sure all your dollars are going to the right place, but you’ll also have to keep on top of your lender and make sure they’re applying your payments to principal. If you don’t specify that you’re making a principal-only payment, you won’t cut down on your interest.

In my opinion, it is well worth it – but it’s not necessarily mindless or automated. Ask yourself what your priorities are. Because if you’re not 100% committed, then perhaps it’s not the right time for you to take on this type of strategy.

Episode Resources
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How to Pay Off Your Mortgage in 5 Years 
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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.

AFFILIATE DISCLOSURE: Some of the links on this channel are affiliate links, meaning, at NO additional cost to you, I may earn a commission if you click through and make a purchase and/or subscribe. However, this does not impact my opinion. We recommend them because they are helpful and useful, not because of the small commissions we make if you decide to​ use their services. Please do not spend any money on these products unless you feel you need them or that they will help you achieve your goals.

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Posted on

January 30, 2025

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