Today, we're discussing how to pay down your 30 year mortgage quicker than 30 years, so let's get to it. I'm Sandy Curtis with Berkshire Hathaway Bowen Realty in Hagerstown, Maryland, and today we are discussing paying down your mortgage early.

So let's discuss the different ways to get your mortgage paid down a little bit faster than you would with a 30 year mortgage.

There's obvious advice that I can give you, such as don't spend the maximum amount of money that you're pre-approved for. Just because they pre-approved you for it doesn't mean you need to spend it. Also keep in mind that it is best to try to qualify for your mortgage based on one income. So if you have a dual income house, then you want to use one of your incomes to qualify for your loan. That way if something were to happen, you would have the other income to fall back on.

Another thing to keep in mind is the more money you put down on your mortgage, the quicker it's going to be paid back. If you have credit card debt, you should pay your credit card debt down before you pay your mortgage down because your interest rate on your credit card is revolving and it is more than likely higher than what your interest rate is on your mortgage.

Living frugally can help you also, because you're not spending more money in different aspects of your life, and it gives you extra money each month to put towards your mortgage payment, in other words paying your mortgage down sooner.

So there's a few things I do recommend you do to help pay your mortgage down a little bit quicker than it normally would if you didn't follow these steps. We have now borrowed the full, maximum amount of our house, we have put a fairly large amount of money down, and we have equity in the home, but we want to pay the loan down so that we don't have that over our heads and we can live in the house without a payment due every month. That sounds ideal.

Well, how would you go about doing it?

It's going to depend on your individual needs and abilities. The first thing anyone's going to tell you to do to help you pay your mortgage down is make an extra payment every year. If you make one extra mortgage payment every year, it can knock years off of your loan and save you thousands in interest.

Let's have a look at Dave Ramsey's calculator, and show you how you can pay your loan down faster based on how much you pay. Okay, so let's say our loan amount is $200,000. Just for easier math we're gonna use $200,000 as our loan amount. Our first payment is due in January of next year, just saying, if you have a current balance, there is also a button here, the blue letters, you can click on that and use your current balance on your current loan.

This is just an example though, so we're gonna use the basics here. So our loan amount's $200,000, first payment's due in January, it's a 30 year loan, and it's at 3% interest, giving us a principal plus interest payment of $843.21. So if we were to make an extra $200 a month payment bringing our payment to $1,043.21, and we do that on a monthly basis, we would be saving $30,910.34 cents in interest, guys. That's a car! And eight years and two months off of your mortgage. That's pretty awesome. That just turned your 30 year mortgage into a 22 years mortgage, not bad.

Let's say you rent out one of your rooms and you're getting $400 a month, well, let's add that $400 to your $843 monthly payment, and that's gonna come in at $47,395.36 savings in your interest, guys. That's almost $50,000, and it cuts 12 years and nine months off of the mortgage.

That's pretty awesome, but we're not all in that position, so let's back this up and say, okay, well, I have an extra $50 each month that I'm going to make on my mortgage payment, and that $50, $50 extra a month is going to save me $10,000 in interest and cut two years and seven months off of the mortgage. That's pretty awesome.

Let's say that we have the ability to make only one extra mortgage payment. So remember, our mortgage payment, based on this $200,000 loan amount, is $843.21. We're going to do this yearly, so we have that one extra mortgage payment per year, and that is going to save us 14,033.66 in interest and cut three years and seven months off of our mortgage. That's pretty awesome.

Let's say you come into some money one year, let's say it's $10,000, and you wanted to put that towards your housing. Can you do a one-time payment? Why yes, yes you can. And how much would one payment of $10,000 save us on our original loan of 200,000? It's gonna save us $13,000, so if you put down 10,000, you're going to save an additional 13 in interest. That's pretty good guys, two years and four months off of the mortgage.

So as you can see, paying down your mortgage could be a benefit to you even if it's just a one-time payment, a monthly payment, quarterly, yearly, you choose. Just make an extra payment on your mortgage and pay that loan down a lot faster.

Now, do I recommend 30 versus 15 years on your loan? Again, it is going to depend on your individual needs and your individual goals as to where you wanna be in 15 or 30 years. However, I will note that a 15 year mortgage is going to have a much larger minimum payment due every month for that 15 years, whereas a 30 year mortgage is going to have a much lower payment due each month, and it could open you up to making an extra payment or two.

If you can afford the higher mortgage payment on a 15 year loan, but you have a 30 year loan right now, don't refinance it and pay extra to refinance when you can just put that extra payment towards your monthly mortgage payment and pay your loan down faster.

These are all things that I have picked up over the years. I am not a financial advisor so please, by all means, if you have further questions about how to save money or how to invest your money, that is a financial investor question, and I would recommend you reach out to them.

Our options are to keep your loan as a 30 year mortgage versus a 15 so you're protecting yourself with a lower monthly payment in case something were to happen, but you're living frugally and you're saving money each month to go as an extra payment towards your mortgage. So you're paying your mortgage down a little bit faster each month, and it brings years and thousands of dollars in interest off of your loan in the end.

However, I will note that if you can afford a fairly hefty extra payment each month, it might be in your best interest to look and see if it is a value to you to invest that money versus paying the mortgage off sooner. I am not a financial advisor in any way, shape, or form. I am just giving you feedback on what I have seen over the years, and maybe it will benefit you. Pay your mortgage down sooner, become debt-free, or invest towards your future.