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Our home costs my wife and I about $400 per month, including taxes, insurance, HOA fees, utilities, and basic maintenance (the homeowner’s association is responsible for everything outside of the interior walls).
It’s cheap because it’s a small condo, and because we have no mortgage payments.
Yes, in case you’re wondering, it’s great to be mortgage-free. It feels good to not owe a cent to anyone, and the money that could have been going to loan payments is freed up for spending in other ways.
Even back when we borrowed to buy homes (3 of our dozen previous homes), we made it a point to pay off the loans as fast as possible, usually within a few short years.
Want to do the same? You probably can if you use the strategies outlined here to pay off your mortgage faster. This first suggestion may be too radical for you, but it’s followed by nine more, so find the ones that work for you…
1. Buy A New, Cheaper Home
The idea here is to invest less in a home, and therefore have less mortgage debt. Ideally, if you have enough equity in your current home, you can sell it, pay off the mortgage loan, and pay cash for something cheaper.
But even if you can’t pull that much cash out of your home, by “trading down” to something costing substantially less you’ll have less debt, so you can pay it off faster using the rest of the strategies that follow.
Before you dismiss the idea out-of-hand, you might want to read an article or two on small-home living, like “12 Reasons Why You’ll Be Happier in a Small Home.”
My wife and I have come to really appreciate our small living space (675 square feet) for many reasons, including less time spent cleaning and maintaining it (we would rather be having fun).
2. Pay Off Other Debt And Apply The Freed-Up Income To Your Mortgage
Most of the strategies here are about applying more and more money to that mortgage debt, in order to knock it down as fast as possible. But if you owe on credit cards or have other high-interest debt, it makes sense to pay those off first.
After all, mortgage loans usually carry the lowest interest rate of all your debt, and if you want to be totally debt-free you should always work on the highest-rate debt first.
So pay off those cards! See my article on “15 Ways To Quickly Pay Off Credit Card Debt” for ideas on how to accomplish this step.
As you eliminate those balances one-by-one, apply everything that was going toward them to your mortgage debt.
In other words, if you were paying $300 per month on credit card debt and $400 per month on a car loan, once those debts are paid off, you can pay another $700 toward your mortgage loan every month.
3. Put Your Entire Tax Refund Toward Your Mortgage
The average tax refund last year was $2,900. If you throw that much extra at your mortgage every year it will really speed things up.
Sure, you may have wanted to spend that money on a vacation or something else, but think about this: If you have a $1,000 mortgage payment and you you pay it off early, from that point forward you’ll have an extra $12,000 annually to spend how you like.
4. Refinance At A Lower Interest Rate
Enter your current loan data into a refinance savings calculator,, and you might discover that you can save tens of thousands of dollars by refinancing at a lower interest rate — but only if you make normal payments for the full term of the loan.
Of course, if your intent is to pay off that mortgage loan in 5 or 6 years your savings will be far less. That’s why this is probably the weakest strategy here.
In general you should refinance only if the loan costs (points, fees, appraisal) are very minimal, and the interest rate difference is more than 1 percent, and there is no prepayment penalty.
Also remember that if you refinance into a new 30-year loan, you better pay extra every month or you just pushed your goal of being debt free even further into the future.
5. Rent Out Your Bedrooms
Renting out bedrooms is how I paid off my very first mortgage in less than four years, instead of 15 years, which was the original term of the loan. You can read more about how to do this in my appropriately-titled article, “How To Pay Off Your Mortgage by Renting Out Rooms.”
If you like the idea of making some mortgage-payoff-money from your home, but aren’t sure you want long-term tenants, consider the next strategy…
6. Become A Hotel For A While
You’ve probably heard of Airbnb.
The platform helps you arrange for short-term rentals of a bedroom, a basement, or even a spot for a tent in the backyard. For an example of how much you can make, see Kelly Kampden’s article on how he madeover $41,000 using Airbnb.
Maybe you might like the idea, but you hesitate to turn your home into a permanent hotel. In that case, just do it for a week or two each year, and apply all the income you get to your mortgage.
To maximize your income rent it out during “high season” in your area. That might be summer in the north, winter in the south, or during festivals or other local events.
If you do this for two weeks or less each year the income can be tax-free. Here’s what the IRS has to say about that:
“There’s a special rule if you use a dwelling unit as a residence and rent it for fewer than 15 days. In this case, don’t report any of the rental income and don’t deduct any expenses as rental expenses.”
That means everything you make can be put toward that mortgage.
7. Use Your Home To Generate Income In Other Ways
In addition to renting out rooms, there are other ways you can use your home to generate income. Of course, any new income can then be applied toward that mortgage debt, so here are a few ideas…
Have A Rummage Sale – If you’re in a good location, a rummage sale can easily produce a couple hundred dollars once or twice each year. If you’re selling only personal items rummage sale proceeds are tax-free, which means all of the money can go to paying down that mortgage.
Rent Out Your Yard – People need places to store their RVs and boats, so they might pay hundreds of dollars per season for a spot in your backyard. You can advertise on Craigslist.
Rent Out A Shed – I used to get $50 per week for a shed that was used as a bedroom, but typically shed rentals are for storage space. Websites like Sparefoot.com will help you find customers, or you can advertise on Craigslist for free.
Rent Out A Parking Space
When I had room renters I used to rent out an extra parking space for $25 per month to one of my tenants. Now it’s easier than ever to find parking customers (and at much higher rates) using tools like SpotHero.
Grow Things To Sell
If you like to garden you might use your yard to grow specialty items to sell. A catnip growing guide will get you started if that’s the way you choose to go. The other option is to grow things and then make sellable things from them.
For example, my wife and I used to harvest grape vines from our back fence and make wreaths from them.
Just take a look around and see how you might use you home to make money (I used to run a “closet grocery store” for my tenants). Then, of course, use every dollar you make to pay down that mortgage.
8. Lower Your Expenses And Apply The Savings To Your Mortgage
If you can find a way to reduce your electric bill by $20 per month, you can afford to pay an extra $20 toward that mortgage loan every month, right?
So why not systematically find savings in as many household expenses as possible, and apply all of the money saved to the mortgage?
9. Eliminate Your Mortgage Insurance
If your mortgage is relatively new you’re probably paying mortgage insurance. To get rid of the mortgage insurance you have to owe less than 80% of the value of your home. So push hard to do that as soon as possible.
The catch is that you have to call your lender and request that the insurance be dropped as soon as you get below that 80% threshold. Otherwise they can keep charging you for it until the value is below 78%.
Of course, as soon as you no longer have to pay for the insurance you’ll apply the money saved to paying down the loan.
10. Develop New Income And Devote It To Mortgage Repayment
If you are really determined to live mortgage-free, and soon, you should develop extra sources of income and apply everything you make (after taxes) to paying down that loan.
A second job is one way to go, or you might look over our list of “115 Ways To Make Money Without Leaving Home” for ideas.
Put It All Together And Pay It Off Fast
Okay, let’s look at an example of what you might accomplish by using a few of the ten strategies listed above. Let’s say you…
- Pay off your $450/month car loan
- Pay off a credit card that was costing $100 per month
- Set aside $2,000 from your annual tax refund
- Rent out a bedroom for $100 per week
- Work one overtime shift monthly for a $180 each time
Do those five things and you would have almost $16,000 to apply to the mortgage loan every year. That’s on top of the regular payments you’re already making, so you’d be paying off your mortgage much faster.
If you kept the mortgage as small as possible to start with, an extra $16,000 per year can get you to your debt-free goal in a few short years.
If you’ve paid off your mortgage ahead of time, tell us how you did it … and keep on frugaling!