How to Pay Off a 15 Year Mortgage in 7 Years

Paying off your mortgage early can save you thousands in interest and free up your income for other goals. If your goal is to pay off your 15 year mortgage in just 7 years it is possible with strategic planning and commitment. In this article, I’ll explain different methods to slash your mortgage term dramatically.

Start with a Reasonable Mortgage

When taking out a new 15 year mortgage, make sure to buy a home you can comfortably afford based on your income, expenses and goals. Getting a less expensive house with a smaller loan balance will make it easier to pay off faster. Run the numbers to see the monthly payment is 25% or less of your take-home pay.

Make Extra Principal Payments

The simplest way to pay off your mortgage faster is sending extra money toward the principal every month. Even an extra $100 per month makes a difference. For a $150,000 mortgage at 4% interest, paying $100 more monthly shortens the term by 3 years and saves over $13,000 in interest.

Sending extra to principal is more effective than just making one extra payment yearly because the interest savings compound monthly. Always specify the extra amount should go to principal only.

Increase Your Regular Payment

Another route is formally increasing your normal monthly mortgage payment. For example, you could change your payment from $1,000 to $1,500 monthly, with the extra $500 going to principal. This builds equity faster without having to manually make extra payments.

Make Biweekly Payments

Paying half your monthly mortgage every two weeks adds up to an extra full monthly payment yearly, since there are 52 weeks in a year. This equals 13 months of payments instead of 12, accelerating payoff.

Refinance to a Shorter Term

Refinancing your 15 year mortgage to a 10 or 12 year term keeps the same loan balance yet shortens the length. Your payment will increase but you’ll slash interest costs and years off the loan. Crunch the numbers to see if it fits your budget.

Use Windfalls Wisely

Bonus payments at work, tax refunds, inheritance money and other windfalls can make a big dent in your mortgage if you put them directly toward principal Even $1,000 extra can knock off months of payments. Avoid spending windfalls so you can use them strategically

Downsize Your Home

Trading your current house for a smaller, less expensive one can wipe out your mortgage fast. Selling your home provides equity you can put toward a new property, perhaps even paying 100% in cash. If you take out a new mortgage, the lower balance and payment make it easier to pay off quickly.

Stick to a Tight Budget

To pay off your home in just 7 years, you’ll need to free up as much money as possible each month Building a strict monthly budget and cutting discretionary spending is crucial Pack your lunches, cancel unused subscriptions, reduce grocery and utility bills, and scale back fun money.

Avoid New Debt

It will be extremely difficult to pay off your mortgage early if you are constantly taking on new debt. Go on a spending freeze for everything except essentials. Drive your vehicles longer by maintaining them to avoid car loans. Say no to credit cards and personal loans that increase monthly obligations.

Turn Raises Into Extra Payments

As you earn raises at work, put that extra income directly toward extra mortgage payments. Don’t increase your lifestyle or spending when making more money. Promotions and bonuses should also be thrown at the mortgage principal to stay focused.

Make Sacrifices Now for Future Freedom

Paying off a 15 year mortgage in just 7 years requires discipline, commitment and intentional choices. Make sacrifices like driving an older car, limiting vacations, working extra jobs and downsizing your home. But you’ll gain financial freedom in the long run!

Crunch the Numbers

Use a mortgage payoff calculator to determine your target monthly payment to reach your 7 year goal. Get quotes from lenders to see payment amounts for different terms if refinancing. Create a detailed budget to find opportunities for cutting back discretionary expenses.

With strategic planning, consistently making extra payments and sticking to a tight budget, you can pay off your 15 year mortgage years earlier. The freedom of owning your home free and clear makes the sacrifices worthwhile!