This is our success story of how we were able to pay off our mortgage loan in a relatively less time. After I got married, me and my husband decided to buy a house. While looking for a suitable house and an affordable mortgage loan, our intention was to pay off mortgage as fast as we could so that we could call ourselves real homeowners.
Bought a house which we could afford
First of all, we calculated our affordability along with what we needed in our house and started searching for a suitable property. We shortlisted some houses which matched our criteria. Finally we decided upon buying a house in an area we liked but it costed little more than our budget. We wanted to buy a property within $350,000 but what we got costed us $360,000. However, after negotiation, the seller agreed to to reduce the price to $355,000.
Used savings for making down payment
I was so keen to have a house of my own that I had started saving, for buying a house, even before my marriage. After marriage, we calculated and found that jointly we could make a down payment of $150,000 on the property. So, we had to take out a mortgage loan of $205,000.
Shopped around for a suitable mortgage loan
We started shopping around for mortgage loans and found one with the best suitable terms and conditions. We took out a mortgage at 3.57% per annum.
So, we did the formalities and bought a house at Carmel, Indiana. We moved in after about 15 days and still remember the day - It was 25th July 2007.
Both of us agreed on our goal
We considered ourselves fortunate as we could agree on common goals and aspirations. We decided to save extra dollars every month so that we could pay off our mortgage loan early. While planning a budget in our new house, me and my husband started thinking on what items we could save and finally agreed upon certain items.
How we saved extra every month
- Restricted credit card usage to minimum - Both of us decided to use credit card as least as possible and that too, we made it a point to clear outstanding balance every month.
- Took up a part-time job - I used to get extra time after my regular office hours. So, I decided to take up a part-time job so that I could earn some extra every month. I started working as a freelance writer where I didn't have to go out and could use my creative talent, too. It was more like pursuing a hobby instead of taking up another work.
- Did not buy a new car - Instead of buying new cars, we decided to continue driving our old cars till we were able to repay our mortgage debt. We used to take our cars for servicing at regular intervals and we didn't face any problem with our vehicles.
- Planned a suitable budget - Most importantly, we planned and strictly followed a budget. It usually happened when we were able to save some more in the previous month. It was our own way of enjoying in the following month. We used the extra dollars to buy an item or to eat out one more day. This gave us the motivation to try to save more the next month and also we wouldn't feel deprived from enjoying life.
And, we could repay it completely in about 7 years of time. We didn't have to bear any mortgage loan prepayment penalty; we would have to pay if we would have paid within 5 years of time. But, we managed to pay off the loan in 7 years which crossed the prepayment penalty period. I still remember the day - It was 29th August 2014 when we became real homeowners and we were able to pay off our mortgage debt in full.
If we, me and my husband, can do it, then you can do it too. Calculate how much you'll gain financially if you can save a decent amount every month and use the extra dollars to repay your mortgage loan. It will keep you motivated and you'll also be able to celebrate the moment of owning a home completely.