These 5 Millennials are Paying Off Their Mortgage Early – Here’s How
Photo: Paula Rollo and her family. Source
If you own a home with a mortgage, or are considering homeownership, paying off the most expensive purchase of your lifetime in full may feel like an impossible task. To all the nay-sayers out there, or for those who think only the 45+ crowd can pay off a mortgage early, we suggest taking notes from these five inspiring millennials and their early payoff strategies.
Live Frugally and Make Extra Payments
Sometimes the best advice for paying off a mortgage early is the most obvious – live beneath your means in order to make frequent extra payments. When Paula Rollo and her husband bought their first home in Houston, Texas at age 24, they immediately made a plan for living frugally so they could pay off their home before they both turned 30.
“Sometimes that meant only an extra $5-$20 a month going towards the house but other times it was much more,” says Rollo. “We don’t make a lot of money, but we keep a tight budget, and skip things like eating out frequently or having a second car in order to reach our goals. Paying extra towards our house each month has always been a line item in our budget.”
Rollo especially recommends paying extra towards your mortgage principal as early as possible. “Even if it’s only a small amount, especially in the beginning,” she says, “This will help get your interest down so more of your regular monthly payment will be going towards your principal amount each month.”
Put More than 20% Down
Photo: Andy Hill and his wife. Source
The easiest trick to paying off a mortgage early? Put more than 20% down on the home itself! This is what Andy Hill and his wife are doing to pay off their Michigan home early. “Try to put down as much as you can, at least 25%,” Hill advises. “You’ll thank yourself in the long run. This gives you automatic sizable equity and gives you a big head start on obliterating your mortgage.”
Hill and his wife put down over 40% on their first – and “forever”- home. By getting a large head start and making frequent extra payments, Hill and his wife are on track to pay off their 15 year mortgage in just four years – an entire year under their initial five year pay off goal.
Re-Think the Idea of the “Dream Home”
Photo: Monica Louie and her husband on move-in day, August 2015
Monica Louie, a self-employed Facebook Ads strategist, who (along with her husband) became inspired to live mortgage-free after reading an article about a family paying off their mortgage in just under ten years; the couple felt confident that with a great plan they could pay off their Washington home in eight years.
Through budgeting and putting all overtime pay toward the mortgage, the couple made fast progress. “In the first 15 months of starting our debt-free plan, we had paid off $90,000 of debt,” Louie recounts, but the couple wanted even more momentum.
“In August 2015, we sold our six-bedroom house and downsized to a three-bedroom. With the sale of our first house, we were able to lower our mortgage and pay off an additional $30,000 using funds from the sale.”
If paying off a home simply isn’t feasible because of take-home income and real estate prices in your area, a mortgage-free lifestyle may mean choosing to downsize or live in a different area.
Master Your Profession to Increase Your Earning Power
Photo: Amanda Goldman-Petri and Family
Instead of focusing on the mortgage payoff, Amanda Goldman-Petri instead focused on increasing her earning potential in order to pay off her Florida home within the five-year timeline she planned. “Rather than job-hopping or journeying to figure out what I want to do with my life, I committed myself to one craft: marketing,” Petri says, “I’ve invested focused effort in mastering that skill, so that I could advance myself and my business very quickly at a young age.”
After starting her online marketing consulting business, Market Like a Nerd, at just age 21, Petri grew the company into a nearly seven-figures in revenue, making it no problem to pay off her mortgage in record time.
Create a Profitable Side Hustle to Accelerate Payoff
Photo courtesy of Crystal Stemberger
Crystal Stemberger, 33, and her husband were already on track to pay off the mortgage on their Texas home early after refinancing from a 30 to a 15 year mortgage (which is another way millennials can accelerate their payoff timeline.)
Then Crystal got creative and started her popular personal finance site, Budgeting in the Fun Stuff in 2010. “I was making about $2000 a month from the blog after the first year and $5000+ a month by the end of my second year,” Stemberger explains. “We threw half of the additional income at the mortgage and saved the other half for another down payment since we wanted a larger place.” By picking up an additional stream of income the couple was able to pay off their first home in 2013, just six years after they made the purchase, and without the burden of a mortgage payment both were able to leave their full-time jobs to run the blog.
Paying off any large amount of debt takes thoughtful planning and work, which is why Hill advises millennials to truly figure out the “why” behind the desire to live mortgage free. “Make sure there is a grand purpose for all of this mortgage pay off madness,” Hill counsels, “Whatever your reason is, make sure it is ever present in your mind so you keep pushing yourself toward mortgage freedom.”