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How We Paid Off Our Mortgage in Under Ten Years

Written by Nickel - 63 Comments

Guess what? We paid off our mortgage. That means we have now have no debt. Zip. Zero. Zilch. Nada. Nothing. And do you know what? It feels pretty darn good.

Yes, we’re well aware of the mathematical advantages of keeping your mortgage and investing our extra cash, but we decided to pay off the mortgage for a variety of non-mathematical reasons.

Our mortgage story – in the beginning

We got our first mortgage back in June of 2002. Actually, we got two mortgages back in June of 2002. We didn’t have enough cash on hand to put 20% down, and we wanted to avoid PMI, so we went with an 80/10/10 when we bought our first house.

Our primary mortgage was a 30 year fixed rate around 6.5%, whereas our second had a rate around 8% and was amortized over 30 years, but there was a balloon payment due after 10 years if we still had it.

Anyway, not long after closing on our house, we ended up killing off the second mortgage in favor of a HELOC with a significantly lower rate. Over time, we rebuilt our savings and eventually plugged it into our HELOC to kill of the balance.

Nowadays, I probably wouldn’t recommend this strategy… We essentially rolled our emergency fund into the HELOC to save on interest. It worked well, but the credit markets are now much dicier than they used to be, and there’s always the risk that your HELOC might get shut down.

Anyway, we ultimately rebuilt our savings without ever having to tap the HELOC, and thus all that was left was our primary mortgage. Throughout this time, we were also consistently paying at least a little extra toward principal.

At the same time, mortgage rates had been falling and we decided to refinance to a lower rate. Once again, we opted for a 30 year loan, but our rate dropped into the mid 5% range. The breakeven period was about a year, so it seemed like a no-brainer at the time. We ended up keeping that mortgage for around two years, so we ultimately came out ahead.

Our mortgage story – movin’ on up

In 2006, we ended up moving to another state. We made a tidy profit on our first house when we sold and… Though we ended up moving to a larger, more expensive home, we were able to put down 50% this time around. Unfortunately, rates had drifted back up at this point, so we wound up with a rate a bit over 6%.

As before, we continued making extra principal payments every month, so the balance was spiraling downward. About 18 months later, rates dropped dramatically and we decided to refinance once again. This time, however, we went with a 15 year fixed rate mortgage at a bit under 5%.

This time around, we had minimal closing costs. Thus, even though we ended up paying the whole thing off about 18 months later, we still came out ahead.

Our mortgage story – paying it off

Okay, as I noted above, we’d been consistently making extra principal payments. Over time, these prepayments got more and more aggressive, so our balance was dropping fast. At the same time, we had also been saving and investing aggressively, fueled not only by my day job, but also by my online endeavors.

Fast forward to this past December. After giving it a lot of thought, my wife and I decided to request a payoff statement from our lender and to make a lump sum payment to payoff our mortgage early. After transferring some money around, I headed over to the bank to wire the funds to our lender.

And that’s all she wrote… The funds arrived later in the day, and our mortgage account was updated the next day to reflect our zero balance. From start to finish, this entire process took just about 7.5 years. This isn’t to say that you should pay off your mortgage early, but rather to provide evidence that it can be done if you decide that it’s the right course of action for you.

P.S. Hey Matt, our debt-to-income ratio is zero. :-)

Published on January 15th, 2010 - 63 Comments
Filed under: Debt Reduction, Mortgages

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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63 Responses to “How We Paid Off Our Mortgage in Under Ten Years”

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  1. 1
    Jason @ Redeeming Riches Says:

    This is awesome. I’ve been getting more and more a desire to do the same thing. We are closing on our new house today and I’d love to get this thing knocked out in under 10 years!

    Thanks for the motivation to keep pluggin’ away!!

  2. 2
    Laura@movetoportugal Says:

    Brilliant! I hope to join you…in 9 years 11 months ;-)

  3. 3
    Kevin@OutOfYourRut Says:

    Congratulations Nickel! Tax advantages notwithstanding, owning your home free and clear is like money in the bank. In fact it’ll BE money in the bank from the payments you won’t have to make.

    (7.5 years…that’s impressive by any standard!)

  4. 4
    Eric Says:

    Wow your mortgage history sounds very messy but congrats nonetheless!

  5. 5
    Paul Williams Says:

    That’s the second huge debt accomplishment I’ve read about today. Did you see Paul @ Fiscal Geek’s post about how he and his wife have paid off all their non-mortgage debt? It was something like $63,000 in 11 months. Story is here: http://www.fiscalgeek.com/2010/01/debt-free/

    Congrats to both of you! Your stories are a great example of what can be done when you focus on a goal.

  6. 6
    Dodder Says:

    Amazing job.. I hope to one day be there.. from the sale of my current condo I will make 50k which will eliminate my CC debt, pay off my other debts and give me a sizeable downpayment on my new place…

    then I can work towards making extra yearly payments to my mortgage..


  7. 7
    Rosa Says:

    Wow, congratulations! So what are you going to do with all that money now?

  8. 8
    Anthony Says:

    This is an amazing story! My wife and I are in the middle of paying off all non-mortgage debt. Hopefully, this will be done in about 2 years. After that, we’ll pound away at the mortgage. If all goes well, we’ll have it paid off in less than 10 years as well.

  9. 9
    My Frugal Miser Says:

    Wow…simply refreshing (and amazing). Congratulations. I’m not there yet, but I’m aggressively paying off non-mortgage debt this year. Most people have no idea how much they spend on interest fees each year. Once I saw that figure, I got laser-focused. It doesn’t matter how low your rate may be when you are still paying a three or four figure amount each month just in interest. Money that could be saved for retirement, invested in a business venture, or whatever!

  10. 10
    ryan Says:

    the selling your house with a tidy profit was probably a key contributing factor here, and these days that’s not going to work… at least for a few more years.

  11. 11
    Peter Says:

    Dude, you are my hero! Amazing job! We plan on making some extra payments this year on our mortgage, but we’re nowhere near this milestone yet. we’ll need a few more years.

    Must feel great to have that DTI of zero!

  12. 12
    BG Says:

    Congratulations Nickel! I’ll have my house payed on in 4 years, if everything goes according to plan. Way to go!

  13. 13
    John Says:

    Hmm, not to sound like a jerk but why is this impressive?

    I paid off my $10000 mortgage in 6 months instead of 30 years… Yay me!

    My point:
    This story is a lot more useful if we know how much the mortgage was for along with a sense of what your income bracket is…

    If you’re grossing $400,000 a year and have a $150,000 mortgage, I would be surprised if you didn’t pay it off in under ten years.

  14. 14
    Nickel Says:

    ryan: It certainly didn’t hurt, but keep in mind that we also moved up to a larger (more expensive) house after we sold. Thus, we still had to pay off a 50% mortgage on a pricier home after the dust settled on the sale of the first home.

  15. 15
    Floridian Says:

    Congrats! We’ve got 8 years and 4 mos at the rate we are paying ours. It’s very hard to do with 3 kids and a stay at home husband, but we are doing it! Although, truth be told, we could do it faster if we gave up the vacation money, but hey, we only have so many years to make memories with the kids, right? And we aren’t giving up the fun stuff.

    and ryan, correct me if I’m wrong, but you just want to know if nickel is just like the rest of us? Is what he did a reasonable feat for the rest of us? And that’s hard to tell when there are no real numbers in this story. I think the biggest point is just like he said…”to provide evidence that it can be done if you decide that it’s the right course of action for you.” So many people live like it’s unnatural to NOT have a mortgage. So they buy/finance more house than they should. Or they refinance (sometimes over and over again) to “cash out,” putting themselves further and further in debt. But I’m with Nickel, I think people should go INto mortgages with the goal of paying it off someday, especially before retirement. People need to know that it’s OK to NOT have a mortgage (or a car payment!). Those people who get out of debt (rather than getting into more debt) will come out far ahead in the long run.

    And what will you do with the extra money? Was the prepayment simply to say you have no mortgage? or was there a goal for the extra money? For us, our payoff date is the summer before our oldest goes to college so we can provide extra help with college costs, if we need to.


  16. 16
    wrc1000 Says:

    Sounds great! ! ! Our story:

    1st home purchase (in 2001) with an 80/20 piggyback (the 80 – 30yr 7.5% fixed/the 20 – HELOC), refinanced in 2005 (paid off the remaining HELOC amount) to a 15 yr. 5.375% and now making twice the regular monthly payment each month – should be mortgage free in about 4 years . . .

  17. 17
    Floridian Says:

    I meant John, not ryan. oops

  18. 18
    John Says:

    I’m currently on pace to pay off my 15-year mortgage in under 13 years or 12.5 years from now. I’m sure I will have more opportunity to pay it down faster, but first I need to eliminate some of my non-mortgage debt. I am shifting debt around to multiple CC accounts in order to save on promotional interest rates, but it’s tiresome. I am making 7 loan payments/month right now. Some are automatic but I want to simplify this.

  19. 19
    Matt Jabs Says:

    @John #19: If you’re looking to simplify, do what I did and consolidate that debt through Lending Club (only if you can decrease all loan rates and come out ahead on interest payments of course.)

    Nickel… all I have to say is… you da man! Ahhh… I cannot wait for the days of ZERO DTI in the Jabs homestead.

  20. 20
    Jim Says:

    Good job.

  21. 21
    Flexo Says:

    Congratulations! Now the question is what will you do with the additional cash flow.

  22. 22
    MoneyEnergy Says:

    Congrats!! Gives me inspiration for doing something similar with my student loans (still in grad school, so I’m not “supposed” to pay them off yet). Good to see stories of people who pay their mortgages off quickly to know it can be done. Would be interesting to see the numbers, too – how much you were throwing at it each month.

  23. 23
    Bob Nelson Says:

    How inspiring.

  24. 24
    FMF Says:

    Good for you! Congrats! I did the same over a decade ago and have never regretted it.

    You’ll LOVE not having a mortgage payment!!! ;-)

  25. 25
    Evan Says:

    Congrats FCN! Thats amazing.

    I am with Flexo and his smiling Gravatar – where is the extra money going? Businesses (online or otherwise), brokerage accounts?

  26. 26
    John Says:

    @ Matt

    I looked at LC for a loan, but their rate was going to be 12%+. My aggregate CC rate is going to be around 5% with all the introductory rates I can get, so I can’t justify that extra cost just for a simpler payment system. I look forward to the day that my mortgage and student loan are set up on auto and all other debts are paid, but for another year or so I have to stay focused and keep up with all of the bills.

    I have started investing a little in Lending Club.

  27. 27
    Matt Jabs Says:

    @John: Yeah, definitely do not consolidate via LC if that is the case.

    Stay focused man, you’ll get there – it sounds like you have the right mindset, so now all you need is to faithfully execute your plan!

  28. 28
    A1m0s Says:

    good use of the HELOC. Rates are low it is the way to go.

  29. 29
    Andy Says:

    Did you pay off the mortgage faster thanks to your growing blog income…or was this not really a factor?

  30. 30
    Deana Says:

    Congratulations! That’s what I do with my eBay money – throw it all towards bills. Someday I will join you on the debt free status!

  31. 31
    Pastor Jim Kibler Says:

    Way to go. I am going to start paying down my mortgage this year as I learned how to get a very low interest rate. Like 3%.

  32. 32
    Big Spender Says:

    Congratulations! But you’re going to need some more deductions so that you’re not just shifting your mortgage interest money to Uncle Sam’s tax redistribution fund.

  33. 33
    Financial Reporter Says:

    Good for you! Paying off a mortgage ahead of time requires tremendous determination and sacrifice. Congratulations on truly owning your own home. What a great start to 2010.

  34. 34
    RC@Thinkyourwaytowealth Says:

    Congrats, nickel! Very inspiring post. Your story shows it can definitely be done, if you focus on your goal.

  35. 35
    Darwin's Finance Says:

    Congrats; that’s great. I wouldn’t apologize for the “market investment would have been better” in a decade when stocks were flat (lost money to inflation). While someone in the 90s would have done better investing the excess cash, you did the right thing. Congrats again!

  36. 36
    MoneyMagnetMummy Says:

    I am so inspired. I hope to pay off ours in 5 years. We only purchased our first home 4 months ago, but are currently renting it out to help pay it off. We are a one income family at present and I am trying to make extra money in various pursuits ‘on the side’ to increase our payments.

    I know people say that a homeloan is good debt, but if you can pay it off, I would say that it is ‘great debt’, that being $0!

  37. 37
    NCN Says:

    Nickel, Wow! That’s such great news! Congratulations – Your hard work has now paid off – big time! You ROCK!!!

  38. 38
    Oregonsun Says:

    Thanks for the great story…makes me even more motivated to get out from under our mortgage!

  39. 39
    Kelly Says:

    Congrats! That’s such an inspiring story.

  40. 40
    Don@MoneyReasons Says:

    Good job! I’m getting excited, since I will have my home mortgage paid off next month.

    I hope you have plans for the additional money you’ll be able to save, I’ve been floundering trying to make sure I have the correct mix for the additional funds.

    Perhaps I should just put it in some ETF index fund or something similar…

    Then again, maybe gold (it’s priced aweful high right now though)… The asset diversification would be nice to have.

  41. 41
    Taylor at Household Management 101 Says:

    Congratulations! That is great. One day we hope to be there too!

  42. 42
    Cents Says:

    Wow, congrats! Not many people can say they truly own their home. Enjoy the freedom.

  43. 43
    Alain Says:

    Excellent! It’s wonderful that you can pay down your mortgage so quickly. But for most homeowners, I think it makes more sense to NOT payoff the house and save the cash just in case of a job loss. The economy is not recovering anytime soon and jobs will be unstable. In this current economic downturn, cash is king.

  44. 44
    Madison Says:

    Congrats Nickel! I really can’t bring myself to pay any extra since ours is at 4%, but I admire that you did it. I bet it feels fantastic.

  45. 45
    Rod Says:

    Congrats. I did the same thing in October ‘08 when the economy almost collapsed. At least they cant take away our homes…as long as we pay the property taxes. I got rid of all other debts too.

  46. 46
    Cool to be Frugal Says:

    Awesome! Congrats Nickel! You’re an inspiration and the model for us to follow when we re-enter the housing market.

  47. 47
    jiffypop Says:

    That is a great job! I also like that someone commented earlier that while they are trying to make as many extra payments as possible, they aren’t cutting things out like vacation with the kids. It is important not to become a slave to paying off the mortgage. If you have kids it is the best time of your life and don’t regret that you didn’t get those season tickets to the baseball team or vacations to the beach because you wanted to pay off the mortgage. The good times with family and friends is certainly worth the 5% interest I pay on my 185k mortgage. I find the mix in my life perfect as I balance a mortgage with other fun family and personal stuff (I have no other debt and a solid emergency fund and 401k) AND giving to charity. Remeber, when you get to the pearly gates you get no extra crown for owning your home.

  48. 48
    thrifty Says:

    What is important to remember is that vacations can be had without compromizing your long term debt free goals. We have a great time fishing, camping, swimming at various inland lakes, picniking, bike riding and just enjoying each other’s company. There are so many vacation opportunities that do not break budget and if the kids get used to budgeted vacations from early on they will never know the difference. We are surrounded by parks and lakes so it is easy for us. One vacation idea that has worked out awsome for us is to get a cleaning lady who cleans, does laundry and cooks dinner for us while we explore the parks for the day. There is nothing like coming home to a clean house and a home cooked meal after swimming, hiking and biking all day. Great vacation for under $200.00 and there is no place like home. One year we did this for 3 days, the best $400.00 ever spent(She only had to do thorough house cleaning and laundry the last day) This was when gas prices were outrageous and our children were so little that hotel stays were hell. While we are not in a hurry to pay off our 15 yr. mortage at 4.25% we do everything that we can to be careful spenders so that we can enjoy life without money stress. For those of you who need numbers to see if this is possible for you, let me tell you what was once said to me that changed my outlook on money, if you always spend less than you make, you’ll always have enough.

  49. 49
    David Hamilton Says:

    Anyone that has deployed overseas as either a contractor or service member has no excuse not to pay down debt. As of 10NOV10, I paid off my mortgage with income tax free (not tax free as advertised because I still pay SSI) from two combat deployments.

    born April 2003
    died November 2010

  50. 50
    Dave Says:

    There actually are no mathematical advantages to not paying off a mortgage. The tens of thousands of dollars spent on interest will never come close to the lessor income tax mortgage deduction. Like wise, the differnece of extra interest earned by investing instead of paying off the mortgage can not be weighed evenly against the huge risk of that size of debt.

    Don’t believe me, just ask one of the millions Americans that have lost their homes…..

    Debt is risk, pure and simple.

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