Today we’re talking about paying off the house early because, who doesn’t want to have a paid for home?
To recap, Baby Steps 4-7 can be done all at the same time. Which is great news because not having any consumer debt will make it easier to a) save 15% for retirement b) save money for kids’ college and c) Yes, baby step 6, pay off your mortgage early!
If you haven’t purchased a home yet and you’re preparing to do so, saving money during Baby Step #3, (building a fully funded emergency fund) is where you can start saving for a down payment.
When determining how much you need to save to buy a house, consider how much of a house you really need. For example, I refer to our home as a humble abode. It’s not that we cannot afford more, but truthfully, we do not need more just for the sake of having bigger, newer, or more. (For reference, there are two adults and one “puppy” in our home. We rent out the upstairs to another adult bringing in $850 a month. The space we live in is around 1200 sq. feet)
Being a homeowner is part of the American dream for many. Yet the ability to purchase a home continues to evade many. Forbes magazine reported “Homeownership has long been accepted as a core component of the American dream, as it confers several economic benefits on homeowners, including the ability to accumulate wealth by accessing credit, building equity and reducing housing costs.”
According to Census Bureau data, over 38 percent of owner-occupied housing units are owned free and clear. For homeowners under age 65, the share of paid-off homes is 26.4 percent.
If you want your home to really be a blessing become a statistic in the best possible way, by paying off your home early. You can do this by making additional payments to the principal every month. You can also consider the costs of refinancing to a 15-year mortgage. This will also increase your monthly payment.
When you do pay off your mortgage, it will be time to add your property taxes back into your budget. Those are typically wrapped up in your mortgage payment. If you haven’t already, make sure to include house repairs in your monthly budget as well.
And, CELEBRATE, having a paid for home!
If you want to figure out how to pay your home off faster, send me a message. If you have already paid off your home, tell me below, how you did it.