Turning any Mortgage into a 10 Year Mortgage

Some people just manage to turn whatever mortgage they have into a 10 year mortgage. Few things can feel as good to a middle-class family as to pay a mortgage off quickly and to know that they own the roof over their hands. Some people will wonder about the wisdom of such a move though.

Isn't it much smarter to keep your money invested somewhere that pays well and then to extend your mortgage as far as possible, they will ask.

We didn't have enough to put the 20% down when we needed to buy a house in 2002. And so, we got a regular 30 year mortgage that went with a fixed 6.5% interest rate. We took a second mortgage at 8% then, and it was amortized over 30 years. The contract also had a balloon payment to it after 10 years.

The first thing we did was to try to switch to a HELOC that paid a lower rate. We saved hard, paid our HELOC off, and we were free of the second mortgage. Yes, we took quite a bit of risk here. We didn't put anything by for an emergency, at all. Whatever we had, we used to pay our mortgage off with. This may not really work today at a time when any employer might actually shut down.

Anyway, we've managed to rebuild our savings over time, and all we had to deal with was the main mortgage. Not only would we make our monthly payments right on time, we would always manage to cut back on some luxury or something each month, to pay a little extra toward the principal.  You'll find especially through the first few years that paying a little extra is enormously sensible. Most of what you pay the first few years is interest. Working to cut down on the principal can make such a lot of sense.

A little while on, we found that the mortgage rates had fallen. And so, we went ahead and refinanced to take advantage of the lower rates. We didn't opt for a 10 year mortgage, mind you; we went with a 30 year plan, again. We held on to that mortgage for a couple of years.

We decided to sell in 2006 – before the housing collapse. Luckily for us, since we chose to sell before things moved south, we made a good profit. We were able to put down 50% and move into a bigger house at this time. The mortgage rates headed south again in 2008, and we refinanced for an even lower rate. The closing costs were minimal.

What does this all say about how to deal with a mortgage? Our entire focus, if you will notice, was about paying our debt off. We kept trying to pay as much off each month as possible. And that was all it took.