How We Paid Off Our Mortgage in Under Ten Years
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. 
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Filed under: Debt Reduction, Mortgages
About the author: Nickel 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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60 Responses to “How We Paid Off Our Mortgage in Under Ten Years”
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January 27th, 2011 at 12:15 pm
Congrats!!!!!!!!!!!
I have 1 year left and i’m only 28 and a team of 1
What’s next? I’m thinking a rental in AZ?
March 8th, 2011 at 8:30 pm
We just paid off our 30 year mortgage in about 9 years! After saving and investing regularly in mutual funds for over a decade for college/emergencies only to have lost money, we decided to sell those investments and put it towards reducing our mortgage which was at a fixed rate of 5.75%. My personal goal was to have the mortgage paid off and be completely debt free by my 44th birthday which is next month. The plan now is to take what we were paying on our mortgage P&I and put it aside for college savings. The way I see it, we are getting a guaranteed 5.75% return on that money for the next 21 years even if we just let it sit in a money market fund.
Yea I know the tax deduction argument ( which I don’t agree with btw, I pay the bank $7K/year in interest so I can save $1,750 on taxes??? ) and the cheap money argument when taking inflation into account. The bottom line for us is the peace of mind in knowing that we do not owe anybody for anything.
July 20th, 2011 at 3:44 pm
I Refinanced to a 15 year term December 2010 and with making large principal payments each month I project to pay this puppy off in 32 months.
$208,300 @3.875
I don’t care what anyone says this Mortgage is going down.
I’m no longer in the tax deduction club, I WANT OUT!!
August 21st, 2011 at 9:15 pm
My wife and I just paid off our mortgage a few weeks before my 40th B-Day! It’s a great feeling to be completely debt free – especially in these uncertain times. It can be done!
September 1st, 2011 at 10:45 pm
I did it too, just this past Monday (29 Aug 11) in fact! My leverage ratio is now also 0. Tee hee!
November 26th, 2011 at 9:43 am
My husband and I bought a home 2 years ago. We thought he would retire from the military this past summer, long story short he didn’t and we will stay for 3 more years. We hope to have our home paid in full before he retires. Our loan was $200,000. We have never carried debt on our c/c and we live well below our means. Don’t get me wrong, we have a great life, 7 children, we have 2 in college right now, 2 already out of college… it’s discipline and not spending what we don’t have for the past 27 years. I’m a stay at home mom and the peace of mind of never being in debt is priceless. I am no expert but I love financial topics and hurrying to get this mortgage paid off (I hope in 3 years) is my goal.
December 4th, 2011 at 8:45 pm
This is my story. My wife moved out in 1998 and left me with bills. I gave her $12,000 for her share of equity. I worked my butt off for 3 years and paid off the bills, my truck. I retired, sold the house and moved back to a small town in Illinois. I made an offer on a nice smaller house with 50% down payment and Wells_Fargo for a lender. WF dug up a blight on my credit report and bumped up the interest rate. That made me mad. In 2002, credit was easy to get, so I paid cash by borrowing on my credit cards, $30,000 worth, with zero interest for 6 months and they waived the up front charges. A few months later, a local bank gave me a 30 year loan, with a balloon payment after 3 years. The CC was paid off & I came up with the balloon payment by selling my classic car & cashing in my life insurance. Pretty sweet.
January 17th, 2012 at 6:38 pm
Everyone can pay off their mortgage n 10 yrs or less. Start with a fully amortized 10 year loan. We did and then just paid the balance off last year with 3.5 years left on the loan. Yes the payments are much higher, but the interest paid is so low it’s almost a joke. Then after a number of years the balance is so low you can easily make the final principal payoff in one lump sum.
May 20th, 2012 at 2:05 pm
My mortgage will be paid off next month. Was 15 years and we paid it in 7. We’re still young enough to save a lot of money for the futre retirement years. Hopefully it all goes well. I will sell my large colonial now and downsize to a smaller ranch. Less upkeep and cost. My wife rocks, paying off our mortgage early was something we always agreed on and made a joint effort to make it happen, how we’re almost there….A DREAM COME TRUE!
February 2nd, 2013 at 4:18 pm
A fine piece of advice, and a role model for many Americans who are mired in generally accepted world of debt. I grew up with a role model of my grandma who raised 10 kids during the depression era.
I’ve owned many a car, bought each one for cash. Yes, you can and should save for a car, before you buy it, and there are used cars available in many price ranges – cut your tastes to fit your accumulated savings.
For a home purchase I think it is acceptable to take a loan, and tax policies do encourage that (mortgage interest deduction). Many overplay this as remarked by “Bid Spender” above, while Dave (#50) correctly points out that the benefit of a mortgage interest deduction is always less than the drain of paying that interest – often this difference is more than you might guess based simply your marginal tax rate. Once you factor in thresholds like the standard deduction, and income thresholds for “stealth taxes” like phaseouts in exemptions and in itemized deductions, it really favors actions that eliminating a dollar in interest payment weighed against reducing a dollar of earned interest by keeping that extra money invested.
I too managed to pay off my mortgage fully twice. On my first home purchase I scraped and scrounged through whatever savings I had to come up with the down payment to avoid PMI. Took a 15 year loan – because the interest rate at 11.25% (1985) was maybe 0.25% or 0.5% better than a 30 year loan, and I took perhaps 7 years to pay off the mortgage. Refinanced maybe once and had a stressful time with an attempted/aborted refi, where I learned that the mortgage industry was prettty sleazy (hidden costs, fees and poor disclosure).
On the second home I did take advantage of 0% balance transfer offers from various credit cards several times. Each time I used these carefully woven in to accelerated mortgage payments and savings to pay them before the deadine. Had to put in effort to stay on top of it all, but it did work out for me. I think it took 5 or 6 years to pay off this mortgage fully and incorporated several refinancing cycles during the period from 2000 to 2006 while interest rates trended down. I was fortunate to be able to get zero cost refinancing from GMAC – hence a no brainer each time rates went down about 0.5%. We have been blessed with stable employment for at least one spouse throughout, and are grateful for this.
No regrets from having paid off the mortgages. Yes the family enjoyed many vacations, and the kids have good schools and extracurricular opportunities. They have done and continue to do great. Active in volunteer activities and an inspiration to the parents.
Just some wisdom passed to me from my grandma, and I hope I pass on to my kids and every person out there:
“Waste Not, Want Not”.
Always live within your means.