The Best Way To Pay Off Your Mortgage Fast?

Brought to you by the EveryDollar app. Start budgeting for free today. Yeah, I'm on baby step six. I'm paying off my home. I have no debt at the moment. And I've been in the corners of the YouTube finance world and I found a video about my weekly mortgage payments and signing up for that program. So I'm currently owe $420,000 on a 5.98 30 year fixed loan. And I'm two years in, and I was wondering, do you recommend that I sign up for the bi-weekly mortgage payment? I would not pay a fee for it. Is there a fee associated with it? Yes, sir. Uh, to enroll rocket mortgage does require a single upfront mortgage payment, which for me is $3,500. So I would have to hold as a fee. They take that as a fee. Wow. Uh, no, I do. I guess not a fee. I think it goes towards the principal, sir. A year is your mortgage with rocket. Yes, sir. Okay. Are they charging any fee for the service of the bi-weekly and actually, I don't believe so, sir. I believe they just asked me to make a one-time, uh, mortgage payment, uh, to enroll. And then I am enrolled from then on. Okay. That's possible. I'm not real trusting of rocket because rocket has a lot of shysters going on in there. So be careful, but let me, let's walk through it. Here's why I'm asking that question. All right. So basically a bi-weekly mortgage is half a payment. As you know, David, every two Yes, sir. There are 26 two week periods in a year. So 26 halves is 13 holes, right? Which means that a bi-weekly mortgage effectively pays a single payment extra per year. Correct. So mathematically you would be within $15 of this by simply just writing a check once a year for an extra payment. That's true. And so I kind of thought like what, uh, there's no magic. Yeah. The bi-weekly is not magic. It's just a way to trick you into paying extra principal. I see. And that's the only thing that does it. So if you just took your regular mortgage and once a year sent an extra payment above your regular mortgage, you'll be within 10 or $15 of the same exact result. So it takes a 30 year mortgage and turns it into about a 23. It takes a 15 year mortgage and turns it into about I see, but it's all done by an extra principal payment a year. And really truthfully your own baby step six. So you may be doing more or less of an extra principal payment a year. Are you paid every two weeks? Yes, sir. I do have a salary position. So does my wife. We, uh, we earn about one 86, $186,000 a year. So it would be, it would be kind of an autopilot thing to at least to get one extra payment a year. But I, with those numbers you're giving me, I want you to put more than that on there anyway. Don't you don't wait for the interest rate to be perfect before buying or refinancing a home. Talk to Churchill mortgage, smart buyers, buy the home they can afford now, and then refinance later. If rates improve, Churchill helps you make decisions with confidence instead of guessing. And Churchill mortgage has a webpage with special offers just for our audience. Go to churchillmortgage.com slash Ramsey offer. This is a paid advertisement in MLS ID one five nine one in MLS consumer access.org equal housing lender. With those numbers you're giving me, I want you to put more than that on there anyway. Don't you? Well, the problem is my, uh, my, I have a four-year-old son and I'm paying $22,000 a year for daycare. Um, and that just really hurts the budget. I do feel like I'm house for, I feel like I'm kind of, you know, of your house, you don't need to increase your house payment. I'm just trying to pay this thing off as quickly as possible. Um, currently the way you're going to do that as extra principal payments, not being house poor from daycare. So you got to decide which life is it you're living here, but either way, I want you and baby step six for your sake to get the house paid off. And the way you're gonna do that as extra principal payments. If you want to do that by setting it up as a biweekly and they don't charge you a fee to do it. So if they're charging you 500 bucks to do this or something, well, crap, no, I'll just send it an extra payment. Right. But if they're charging you no fee and you want, and you're paid biweekly and it's easy. Yeah, let's do that. But let's also plan to do more. Um, excellent. And before I let you go, um, I do, uh, earn $11,000 a month with my wife after taxes and my mortgage is 3,500, which equates to 32.2% of my monthly income. Uh, since I'm on baby step six, I don't have any debt. Do you still think I can keep this house? I know you always say sell the house. It's too much, but I really want this home. I think that you're feeling the squeeze, especially right now, because you have somebody in daycare and that's a, there's a seasonality there. That's not going to be like this for all time. So I think that's why you're feeling the squeeze. If there's something you can do to offset that in the meantime, I would do it, but I'm not putting the take-home pay you outlined is after you put money in 401k, right? Yes, sir. That's not the number. No, that's not the number. That's the wrong calculation. That's the wrong calculation. When we say take-home pay, we mean just after taxes only. Yes. Uh, yeah, it's a 11,000 hits our joint account. I know, honey, but that's after they took money out for 401k and probably insurance. Yes, sir. Those two numbers don't count in the calculation. So you're not at 32%. Oh, okay. That's what I'm saying. The only numbers that count in the calculation for take-home pay is after taxes, gross minus taxes. So add back insurance, add back, uh, in your calculation and then say of that number, what percentage is it? And it's going to be down close to 25. So you're, you're fine. I don't think you're hurting here. I think you're just, you know, observing the fact that not only that you're not out of debt completely yet, and even when you are, it's not a magic pill. It's just, uh, it's just a better place than being in debt. That's all. Everybody listening needs to understand what you just said about take-home pay, which is it is only the after-tax amount. When we say have your house be 25% of your take-home pay on a 15 year fixed. We're talking about only after taxes, not after child support coming out, not after your car payment coming up, going to the credit union, insurance, 401k, not after any of that stuff. Okay. So put all that crap. That's not what we're talking about. Good point. Aaron is in Minneapolis. Hi, Aaron. What's up? Hi, thank you for taking my call. So we recently moved to a country home. We thought it would be our dream home, our forever home that we'd raise our kids in. Um, but after moving here, we realized we hate country life. We miss living in closer to a city. We miss sidewalks, all the amenities. We have another home and we are renting it out and we thought we would rent it out for a few years and then sell it and then use that money to pay off said country home. But now we are unsure of what to do because we do not want to stay in said country home. We'll sell said country home and move back to the city. What's wrong with that? So our other home is three hours away and sell it. Sell both of them and buy a house in the city. That's what you think we should do? Sure. If none of them are working for you. I don't want to rental house in a country home and I want neither. Why don't we say I don't want to own them anymore. So what am I going to do? I'm going to sell them. And you could probably buy what you want maybe in cash. I'd get rid of both of them. Even if we just recently bought said country home. How are you arguing with me? You called me up and said you didn't like it. No, I'm not. Are you going to hope it? You're going, well, I just bought it. I know, but I don't like it. I made a bad decision. Unmake the decision. Okay. You didn't get married. You bought real estate. Okay. Thank you so much, Dave. Yeah. It's hard. It's hard to get rid of the married thing if you do that one wrong, but real estate when you just put it up for sale, it's more simple than you think. I think. Yeah. Well, it's just, I mean, you may lose a little money on it. Okay. We, we made a bad decision with some, something about our vision for life was askew. And, uh, so we may pay some tax for that. Stupid tax. We may pay some stupid tax for that. That's okay. Okay. I've done dumber things than that and thought I wanted something that I didn't didn't. And, um, but I'll tell you what is interesting to do, Aaron, in these situations and anybody else I've done a lot to myself when I find myself in a situation like that called a mistake, that's a mistake. I want to backtrack and think through how did I get, what does, what caused my brain to malfunction that allowed the what decision-making framework was I using that was flawed that caused me to, you know, uh, okay. I was looking at Instagram people on Homestead. Well, don't, you know, okay. I've just figured it out. I don't need to be looking at Instagram to do anything that, that it has quality in life, you know? Uh, and, and so what, what was it that caused me to get askew of what reality was? And so that I don't do it again. Well, then it becomes research, not just something stupid you did. It was an experiment. It was an experiment. I found something that didn't work. That's right. Like a test tube when I blew up the lab. Yeah. That kind of thing. Yeah. 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