In February of this year, my husband, two sons, and I walked into the bank and paid off our mortgage. Then we drove home, ate cupcakes, and celebrated the beginning of our mortgage free life!
I’ve been dreaming about paying off my mortgage from the moment I signed up for it. My dad planted the idea when I was just a kid.
Living Mortgage Free
Did your parents talk about money when you were a child? My dad loved to talk to me about financial matters. When I was small, he taught me how to roll coins and balance a checkbook.
When I got older, he talked to me about his old jobs. There was the time he worked in his dad’s grocery store, his short stint as a security guard, and that year he sold insurance door-to-door.
My dad is a vivid storyteller. He weaves most of his tales with a hearty laugh and a big wide grin, but one financial story makes him beam more than all the others.
“Which story is that,” you ask. The tale of his seven-year mortgage.
Shortly after I was born, my parents moved out of the city. They bought a modest house on a quiet street with a big, wide backyard.
As the ink was drying on their mortgage papers, my dad formulated a money-saving idea. “Why wait thirty years to pay off the mortgage,” he thought. “What if I could do it in a fraction of the time?”
When he came home, he enacted a plan. Any time my parents came across extra money, they would use it to pay down the principal. From that point forward, they sent every raise, bonus, and birthday check directly to the bank.
They accomplished their goal in seven years! Most impressive of all, they paid off the mortgage on a single, middle-class income!
“There is no better feeling than living mortgage free,” he told my brother and I, “nothing provides better peace of mind.”
The Safe Feeling of Owning Your Own Home
My dad loves his family. He is the kind of guy who cooks every holiday dinner and stocks the house with the best groceries when I come to town. He buys my mom flowers once a week and sends text messages to say how much he loves my brother and I.
Living mortgage free released my dad from the hefty financial burden of owning a home. It also settled his worries and brought him peace of mind.
“If anything happened to me, I wanted to know that the bank could never take the house away from your mom,” my dad always says. “I wanted to know that you would be safe here without me.”
Reflecting back, I think my dad told us this story to help us feel safe and secure. He wanted my brother and I to know that we would never have to move unless our family decided to do so.
I’m not sure if my dad intended to impart any wisdom beyond that fact, but in telling this story, he set off a spark in our minds.
Mortgage Free Living
I kept his wisdom in my back pocket when my husband and I signed the paperwork to buy our first house. It was a hot day in August, five days after my twenty-fourth birthday.
A few weeks after signing the paperwork, a thick envelope full of mortgage papers arrived in the mail. I pulled out the stack and began to read, but I couldn’t seem to get past the first page. My eyes kept shifting to the number 30 printed in bold above the words “mortgage term”.
I couldn’t stop staring at that number. Thirty years seemed like a lifetime to me. I wasn’t even thirty years old! To pay off the mortgage, my husband and I would need to write three hundred and sixty checks to the mortgage company! By that time, I would be fifty-four years old.
I didn’t want to wait that long to end the financial burden of owning a house. I kept thinking about my dad’s mortgage pay-off story. How could I pay off that mortgage? How could I be mortgage free and debt free before age forty?
Racing Towards the Goal of Mortgage Free Living
Honestly, I can see why some people never want to own a house. Mortgages are expensive, and property taxes, repairs, insurance, and other assorted costs add up each month.
I felt burdened by that big payment and determined to get rid of it, but I didn’t have the money to make any extra payments. In fact, my husband and I paid PMI on that first mortgage. (That PMI payment is a story for another day!)
So I set my sights on the target of living mortgage free even though I couldn’t do anything about it yet.
Two years later, we got to take our first crack at it. After interest rates fell, we modified our thirty-year mortgage to a fifteen-year. Then we started throwing extra money at the principal.
During that time, we lived like an old married couple rather than two young twenty-somethings. We ate at home, shopped sparingly, and didn’t take any extravagant vacations other than our honeymoon.
Putting Our Plans on Hold
We were making significant progress and forging ahead when I fell in love with a water front property. At that very moment, I knew our plans for mortgage free living would have to wait.
We could have continued our race to pay off the mortgage, but we didn’t. Life is meant to be lived. When I found that little piece of heaven, I knew we should buy it. My husband wholeheartedly agreed.
Some financial goals can keep us locked on a path we don’t like. Those goals might keep us working in a job that makes us miserable. They might force us to work a high-paying job rather than opting for a more simple life.
An early mortgage pay-off may have been the original goal, but in this case, we set it aside for just a little bit.
In fact, rather than paying off our house, we applied for a cash-out refinance on it! Our $237,000 loan ballooned into $400,000 as we used the money from the cash-out to buy the new property outright.
Mortgage Free at Last
We halted overpayments until 2012. When my husband’s hard work helped us pick up the momentum once again. We refinanced our 4.5% fifteen-year mortgage to a ten-year mortgage at 3.125%.
Then I created a mortgage chart and began counting down the months. I kept track of the balance and marked off each payment as soon as we made it.
In February of this year, we walked into the bank with enough cash to become mortgage free for life! We paid off the house eighteen and a half years after purchasing it.
Refinancing our Mortgage
Thanks to rising home values and shrinking interest rates we refinanced our house five times within those eighteen years.
Here is a breakdown of our mortgage terms and interest rates:
- 2001: $247,000 / 30 years / 6.875%
- 2002: $243,000 / 30 years / 6.000% (got rid of PMI)
- 2003: $237,700 / 15 years / 4.875%
- 2009: $400,000 / 15 years / 4.500% (cash out)
- 2012: $335,000 / 10 years / 3.125%
When interest rates dropped in 2003, we cut fifteen years off our mortgage and paid roughly the same amount each month.
You can see the big bump in 2009. That’s when we set our initial goal of living mortgage free aside to buy a beach property.
During this period in our lives, I lived and breathed mortgage calculators. As soon as rates dropped, I ran the numbers to see how much more we could save by refinancing.
How to Live Mortgage Free
Does mortgage free living sound like a dream? Would you like to pay off your mortgage early? If you set that goal, let me know, and I’ll cheer you on.
But before you start the quest for a mortgage free life, you might need to do some homework. Here are a few things to check off before you start attacking your mortgage debt:
1. Pay Off All High Credit Card Debt
Mortgage rates are incredibly low right now. If you have credit card debt, you need to pay that off first.
2. Create an Emergency Fund
Make sure you have an adequate emergency fund. Before the pandemic, financial experts thought three to six months was enough. I think you should save even more than that. Don’t pay off your mortgage until you feel safe and secure with a sizable financial cushion.
An emergency fund can cover unexpected job losses. It can also help you take time off to care for a sick spouse, child, or parent.
3. Sign up For Life Insurance
Sign up for life insurance if you have a spouse, partner, or children who will need money in your absence. Paying off your house provides peace of mind, but your family will still need money to pay for food, utilities, and property taxes.
4. Sign up for Long-Term Disability Insurance
After you sign up for life insurance, it’s time to sign up for disability insurance. A thirty-year-old has a 50% chance of being disabled for three months or longer before turning sixty-five. Review your policies at work or buy an individual plan outside of your employer.
5. Fund Your Retirement
If you receive a company match, save at least the minimum amount in your 401k before throwing money at your mortgage. It makes absolutely no sense to turn down that free money. Don’t let the lure of fewer mortgage payments prevent you from receiving your company match.
How to Accelerate Your Mortgage Free Life
After you complete the items above, you can begin your quest towards living mortgage free.
1 – Buy a Modest Home
The easiest way to accelerate your mortgage payoff is to buy a modest home. The less you pay upfront, the less you’ll pay over time. My parents saved money by moving us way out into the country. This approach will work for some people, but others will be unable to handle a long commute. I don’t blame them.
2 – Rent out a Room
A second trick is to rent out a room or basement in your house. I live in a college town where a lot of homeowners rent out rooms to college students. If you don’t mind living with renters, this is an easy way to let someone else pay off your mortgage for you.
3 – Buy a Duplex
Buy a duplex. Rent one side and live in the other. Again, you are employing the technique of letting someone else cover your mortgage.
4 – Buy a Tiny Home
If you can simplify your life and live with less you can find a smaller space. This might include downsizing your square footage in a traditional home or moving into a tiny home with much smaller overhead and ongoing costs.
There are many other ways to house hack your way to a mortgage free life, but I’ll let you read about those elsewhere. My husband and I never tried any of these techniques. Instead, we threw bonuses and raises at our mortgage. Then we made all efforts to stop buying other stuff. We minimized our expenses so we could focus on the big one!
The Power of a Debt Free Life
Before I paid off my house, my dad often joked about winning the lottery. “If I win the lottery, I’ll pay off your house and your brother’s too,” my dad used to say.
That speaks to the power of living without a mortgage. Forget spending money on a lavish vacation or a new car.
“Before you can enjoy the rest of the money, you have to free yourself from the financial burden of a mortgage,” he said.
Living Debt Free Without a Mortgage
March came and went this year without a mortgage payment, so has every month since. Living mortgage free feels like a dream. With a ten year mortgage, we used to send thousands of dollars to the bank each month! Life is so much better without that burden.
We are incredibly fortunate to be at this point in our lives. We didn’t beat my dad’s record of seven years, but I’m more than okay with the timeline to pay off!
Related Posts: Financially Free
Congratulations on having a paid off house! I’m unfortunately still working through extra payments just to get the PMI off mine right now but you live and you learn.
Thank you. PMI is the worst. Our house prices rose fast enough that we were able to refinance quickly and get out of ours, but I’m still mad about paying it. We were young and naive about the process when we bought our house. If we understood better I would have waited to buy. I hope that you are able to get rid of quickly!
Congratulations! It is a wonderful feeling to live in a paid for house. And all the extra cash every month!
Thanks! It sure is. My next post should be about trying not to spend all the excess 😉
This is amazing and congratulations on achieving this goal! We had a 30 yr when we took out a mortgage on our latest home in 2018. We re-fied this July to a 20 yr term but I want to pay it off in 10 years. Well done!
Thank you! It took us 18 years total, which seems slow in the FI space, but anything less than 30 would’ve been a win for me. I hope you can pay your mortgage off in 10 and enjoy the extra breathing space a mortgage free life provides!
This is fun to read about and think about. Here’s my dilemma: we are a family of six. I’ve discovered FI after being a careless spender/giver my whole life. I’ve just never been careful with money. I’m now reformed, and we are making progress. But the big thing for me is our house. It is a beautiful historic home that we’ve put a ton of sweat equity into – we are big do it yourselfers, and we’ve fixed it up since buying it 8 years ago. But it is expensive, and the payments are high. Its value has also risen considerably thanks to our improvements and our location, and we could conceivably sell it and purchase another smaller house in a further-out neighborhood for cash with the proceeds. BUT: our kids go to the local school . . our friends are in this neighborhood . . . our roots are here. . . we can walk to restaurants/coffee shops/library/parks from home. I know the only person who can make this decision for us is us, but I’m curious how you’d look at this? At this rate, we are saving much less than we could in a cheaper house, and living mortgage-free one day is but a dream. But we do love our lives in this house.
Honestly, what I’m about to say goes against everything FI, but I wouldn’t necessarily sell the house if I were you.
Here are my questions for you:
1 – Can you find a cheaper house in the same neighborhood?
2 – Can you find a similar neighborhood with most of the same perks for less? Is your family a social crew who could make friends anywhere? Can you find another walkable neighborhood?
There is no harm in reviewing your options and searching for alternative places to live, but if I were you I wouldn’t move to another house just to save money.
My husband and I earned a lot of money during our careers, but we also bought a beach house at the height of the market. Was it a stupid thing to do financially? You bet. Was it the best decision I made in every other way. Yes, it was. It has brought us more joy than anything I’ve ever done with my money. Short of paying off that giant mortgage!
I think you have to weigh the enjoyment you find in your current place against finding another place that could offer most of the same benefits. If you can find it for less than go for it, but if you can’t don’t move just to save money.
At the end of the day money isn’t everything. Yes, it can do a lot for us, including providing peace of mind, but if you really love where you live don’t move unless you can find something that provides similar value.
Just my two-cents. We are in the process of moving, (our public schools are 2/10), and it’s incredibly difficult to find that warm, welcome neighborhood. If I found one and the schools were decent I wouldn’t move!
Thanks so much for the thoughtful response! It’s really helpful and I so appreciate you taking the time to write it. I wish I’d found FI decades ago, but I’m glad to be on the right path now and whatever we decide about the house we’ll be better off than if we hadn’t discovered this better way of living. Thank you once again!
You’ll make the best decision for your family. Best of luck. I hope you come back and tell me after you make your choice!
what in the world are u talking about??????…. or what smoke blow in mirror dream world are you living in?????
1. you pay mortgage
2. you pay rent
3. YOU PAY TAXES on property u own
all 3 are the SAME,
1.you buy a house u pay mortgage THAT INCLUDES ALL FEES AND TAXES
2. you pay rent to landlord that pays property taxes
3. YOU ARE MORTGAGE FREE BUT STILL PAY PROPERTY TAXES
at the END YOU PAY PAY PAY regardless if its rent own or mortgage, YOU PAY PAY PAY….
you want a TRUE FREE living you need to have APARTMENTS for RENT that would OFFSET taxes …..
Mortgages and property taxes are not the same thing. I’m not in debt when I go to the store to buy groceries, yet I pay sales tax every time I buy something new from there. Property taxes and mortgages are not the same. We do have a rental property that pays for property tax, but you can certainly be debt-free if you don’t have roommates or renters paying you.
i guess you missing the point. at the end YOU PAY
with a mortgage u have monthly bill to the bank that includes taxes fees and insurance
mortgage free aka u own you pay 2 times a year property tax n school tax, and u can decide if u want home insurance or not optional
of course owning is much better but at the end you still and always pay, u dont pay tax house goes for auction by town u live in.
so the title “mortgage free” is a bit over exaggerated
————-
now if we didnt have such excessive property taxes like in other countries than the title would be more acceptable – aka mortgage free means u own it and no one can take it away and u dont pay anything.
rent = 1K a month give or take
mortgage= 1-1.5-2k a month give or take
own = im in NY 30% is the rate so 200k assesment 6k tax give or take.. 400k asses 12k tax.
now 400k is a real home
200k is more of a mobile home
SO what are u saving at the end? if ur paying 12k taxes thats $1k a month u need to set a side same if u rented an apt.
only difference is its bigger but has other responsibilities….
Safe feeling from owning your own home…??????
you dont pay tax town will take your home away and auction it, where is the safety?
u have to work u have to PAY u pay pay pay…….
you dont own sh*t even if your mortgage free, try not to pay ur property tax 2 years in a row see how fast you be sleeping on a side of the road.
lets say your single, own a home , got jail sentence 3 years, come out and your mortgage free home the so called “safe feeling” now someone else lives in…
I guess we will have to agree to disagree. My definition of living mortgage free means living without a mortgage. While NY may have high property taxes many states do not. We pay just over $200 a month for property taxes on one of our houses. It’s not $0, but $250 is definitely cheaper than rent or mortgages.
Congratulations on paying off your house. And I’m thankful your dad instilled his persistence in paying off his mortgage in you when you were young.
My dad did the same thing to me and my sister as yours did for you and your brother. My dad used to say the mortgage is the biggest burden in your life, once you pay off your house, you’ll be laughing. My dad paid off his house after 20 years of working his fingers to the bone. He did it on a single income with a wife and 3 kids at home, he’s my hero. Anyways, my wife and I bought our first house together in May of 2010. When we signed the papers the only thing I could think of was getting the house paid off. We had a mortgage of almost $200k. We worked all the OT we could, I took on a second job and we sold stuff we didn’t need or had any use for. In 2012 my wife gave birth to our twin boys. This was the greatest and made me work even harder to get the house paid off for them. With my wife now at home looking after our children and going to one income I had to get creative in reaching our goal of paying off the house. After a lot of blood, sweat and tears we were able to reach our goal of paying off the house in April of 2016. It took us a little under 6 years to pay it off!!!!
What a great feeling it is not to have to pay the bank each month.
After being mortgage free for over 3 years we decided to move closer to our children’s school. With the sale of our old house and the money we have been saving over the past few years we were able to buy a very nice house that checked all the boxes. We’ve been in this house for about a year and we will have it paid off by April of 2021.
I want to thank you for sharing your story and hope to inspire others to become debt free.
We are ordinary working class folks who accomplished the unimaginable by today’s standards.
Keep focused on your goals, don’t listen to the naysayers and get it done. I believe in you and want great things for you in your life.
Thank you for taking time out of your day to read my post.
M
Thank you for sharing your story. I love that your dad is your hero! I hope that you are able to pass on the same lessons to your two children. There is no greater feeling than paying off that mortgage. Was it hard to get a mortgage again after paying off your first house? Now that I’m mortgage free I never want to sign another mortgage document again! April of 2021 is not very far away. Congratulations on hitting the mortgage free milestone and for nearly reaching the mark again!
Hi,
My kids already know the first thing they have to do when they buy a house is to pay it off as quickly as possible!!
It’s was hard getting a mortgage again, but I had a plan to pay a 30 year mortgage off in 18 months. So far my wife and I are on track to get it done.
Thanks for the reply.
M
I feel like we could achieve FI if we didn’t live where we do. You can’t buy a single family home short of a million dollars and renting a 3bd/2ba is 4-6k/mo. We bought a 2bd/2ba bc that’s all we could afford at the time without PMI (not to mention we offered more than the list price to secure the place due to competition). Now we have kids and I really want a bigger place. We could sell but we wouldn’t be able to afford a bigger place either. Renting is also way more expensive than our current housing expenses.
It’s really frustrating as we are not big spenders. My husband can’t leave his job right now so we can’t just move somewhere else. Another major issue is the cost of decent childcare is about one mortgage per child. I’m sure we’re not the only millennials in this situation. I just feel like you can’t have FI and kids these days.
Hi Vivian, Thank you for your comment. I agree that millennials are in a much more difficult situation than previous generations. Have you watched Money Explained on Netflix? The episode on student loans provided a great graphic displaying the impossible costs faced by millennials when compared to previous generations. As you mentioned the numbers do not add up in a favorable way for those trying to raise kids and own a home.
Note from a Ph.D. economist: While the goal of living mortgage free sounds nice (I also harbored such childhood fantasies) – it is a financially unsound decision in today’s low-interest rate and higher expected (real) inflation environment for the foreseeable future. The most financially sensible course of action is to have as large a debt as possible on your house that allows the lowest possible interest rate for 30 years, then keep saving your cash in the growing stock market to let compound interest do its long-term magic. Over time, your loan’s real worth will shrink due to inflation and your house’s as well as your saved stock portfolio’s worth will increase.
For my FIRE goal, I plan to save the cash equivalent of paying off my mortgage in a post-tax cash brokerage account AFTER maxing out on pre-tax and post-tax retirement savings – but not ACTUALLY give into the unwise albeit emotionally appealing idea of paying it off.
Thank you for your comment. We considered the option you mentioned, but ultimately decided against it. When we made the decision to pay off our home we were in a very different financial situation with a completely different frame of mind. With more money in the bank the urge to live mortgage free is not as strong. I think your solution can be a good one!