6 Mistakes I Made Paying Off My Mortgage Early
While we have been pretty happy about our paid off mortgage, not everyone feels the same way. Sure haters are going to hate, and everyone has their own opinion about whether paying off the mortgage is the right move or not. I’m still comfortable with our choice.
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However, the more I look back on it, the less perfect paying off our mortgage seems. In fact, the longer I look at the past 6 years the more I realize there were tons of mistakes that I made.
Here are the mistakes, I made paying off my mortgage early. These are just ones I can think of, I’m sure there are more.
Mistake #1 – I didn’t invest
I’ll just come out first with the BIG one and let all the “pro investing” people have their day. While I don’t personally see this as a mistake, there are a lot of people out there who do.
Soon as you bring up paying off your mortgage early there are a ton of people who think it’s the foolish financial thing to do. Really the market could have tanked and I would be better off financially doing what I did.
The fact that the overall stock market entered into a massive bull run for 6 years makes my decision to pay off the house a dumb financial choice. But it made sense at the time.
Wealth wise, however, it would have been better to do it the other way. Still when you look at the chart below and see where things were in 2009 and 2010. I still can’t fathom putting money into the market at that point. Not when I had so much debt sitting on the mortgage.
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Mistake #2 – I locked into a fixed rate when variable would have been cheaper
We have been in a period of unbelievably low rates for a very long time. I’m not smart enough to say that I could see it happening. In fact, I lived in fear that the rates would change at any time. I was lazy and didn’t want to look at the variable rates every week and see if my rate was ticking upwards.
To avoid the mental anguish that I imagined (yes imagined) would happen if rates were to go up I picked a fixed rate. I figure in the first two years alone this cost me around $10,000. You can see what a different rate will do to your mortgage with this simple mortgage calculator.
Not smart, not cool.
RELATED POST: 28 THINGS WE GAVE UP TO BE MORTGAGE FREE
Mistake #3 – Paying to get out of our mortgage to get into a shorter better rate mortgage
I paid to get out of one mortgage to get a better rate, which didn’t save me tons in the end. I did this for mental reasons. The savings, in the end after the fees to get out, were between $1000 and $2000. But the mental aspect was HUGE!!!! Switching from a 10 year to a 4 year and telling ourselves that this was our deadline.
Financially it made little to no sense. If we didn’t pay it off when we changed it I and had to go into a new mortgage those amounts would have surely been wiped out by interest over the same period.
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Mistake #4 – Bought a Bigger House Than We Needed
I bought more house than I needed. Man, does that feel good to let out! This isn’t a mistake paying off the mortgage, but it was still a mistake. We could have very easily gotten by with less and been mortgage free earlier.
Or better yet, made it work in our smaller house and been all the better for it. We kept having this idea of success was living in a big house and really it’s not.
A bigger house might impress people but it’s a time suck. We have more house to clean and maintain, more house to furnish and overall just more money that will go out the door because of it.
Now we have a bigger house that needs more furniture, a basement that will probably stay unfinished for another 10 years, and a yard that takes me several hours a week to maintain.
RELATED POST: HOW WE PAID OFF OUR MORTGAGE IN 6 YEARS
Mistake #5 – I Threw Everything at Our Mortgage
This was our strategy and it cost us in opportunity. The thing that kept sticking in my mind was. “What if I’m wrong?” “What if this is the dumbest thing I could do and my family suffers for it?”
I’m not sure why I had these thoughts, but they were definitely there. Trips with the kids we didn’t go on.
Special outings with friends and family that we had to say “No thanks” to. They all kind of left me feeling a little bit empty and asking “Is this worth it?” I guess that could be another one, mental anguish. 🙂
Many opportunities were missed, sure in the grand scheme of things they aren’t that big but when you start saying “No” to every offer eventually people stop asking. Throwing everything at our mortgage also kept us in a scarcity mindset, which I am trying to escape. Not because I think it’s bad, but because I find it gives me a certain tightness in my stomach that I would prefer not to have. Does that make sense to anybody else?
Mistake #6 – I didn’t live in the moment
This one isn’t a mortgage thing but it was something I was very aware of the whole time we were paying off our mortgage. Watching people buy new toys, live their lives of luxury and fun, while we chipped away at our debt was very bothersome at times.
I’m not saying spending money is a way of living in the moment, but there were a lot of times when I thought “Why am I doing this?” and “Is this really going to be worth it?“.
There were countless times that my wife and I came home from someone’s place, seeing the new things they had got, or new trips they had been on, and we were envious.
In fact, sometimes I was outright jealous.
All we had was each other, to tell ourselves “This is the right thing”. Not knowing for sure if it actually was THE RIGHT THING.
Honestly, when you embark on paying down a ton of debt you are going to be doubting yourself a lot. It’s normal. T
urn to people who have already done it (like parents or bloggers) and see how happy they are to be free. Reach out to them and tell them the trials you are having, it will get better.
There you have it! My 6 mortgage mistakes I made paying off my mortgage. What do you think, leave a comment below and let me know if you think I did the right thing paying off my mortgage early or if I should have taken a longer time?
The First Step on the Road To a Paid Off Mortgage
Like I mentioned earlier, when we got started with paying off our mortgage the first thing I did was change the mortgage rate, a 1% difference adds up when you have hundreds of thousands of dollars to pay off.
The lower the interest rate you can get, with the terms that suit your needs, the better.
For us refinancing at that lower rate was our way of saying to ourselves: “Ok let’s make this happen!“
Remember one of the biggest part of your mortgage is the interest rate.
Check out Lending Tree’s rates to see how much money you could be saving with a lower rate. By refinancing, you could end up saving years of payments in just the interest rate alone. This is a long-term game and the interest you save by refinancing to a lower rate adds up quicker than you think!
I found this helpful thanks for sharing!
Thanks Kayla! I appreciate that. 🙂
I love that you see the pros and cons to your win. We LOVE not having a mortgage. But to do one thing, means not doing something else. We work really hard to have some adventure and fun added to each week. There are so many free or low cost options here, so time is more the issue. But when we are doing lots of fun and exciting things, we don’t really feel like we are living frugally (even though they aren’t expensive).
The big house can be such a time and money sink. Have you ever read,”If you give a mouse a cookie”? It never ends! We often think about getting something bigger, but it comes with such a huge price tag.
You’re right. Once you get in that big house you want to furnish it, then you want a nice yard, then you want a nicer car. Your wants dictate your life, it’s not bad because it can motivate you for bigger and better things but at the same time I think that you need to be aware that you will always “want” something. Delaying the gratification of the want has been my only solution that works for me.
Finding your articles really interesting. We are retired, and living on a fixed income. We have a very simple system of saving, and it’s fun that we manage to do so each month. My husband records our daily spending, and that’s huge! I know people say your credit card does that for you, and that’s true, but it’s not like actually looking at your receipts each day and recording them.
This year we started saving by each putting a dollar into a little bag the first week. 2nd week it was two dollars. Now we’re up to 21 so that must be 21 weeks from the beginning of the year. At the end of the year we’ll have enough moolah for a nice trip, or…?
It’s getting tougher each week, but that’s inspiration to figure out saving in another area!
Hi Vicki! Thanks for the comments! I love the savings idea. I can see it getting more and more challenging but wow! it’s going to be great when you get that nice big pot of money at the end.
I like the idea of the writing down all your expenses, there is something about doing it that makes you more aware of what you are spending on an on-going basis. Good job!
We paid off our mortgage maybe not early but in a timely manner and I have never felt more at ease knowing it is done. If you want something to last you have to take care of it, same thing holds true for a house. Since then we’ve been able to help our kids out some while trying to start their lives and that’s worth every missed opportunity while paying off our mortgage. And I also believe that God has blessed us by being trustworthy with what He’s given us.
Great job on paying off the mortgage Missy! Being able to help our of kids is a big one for us too. We want to be in a position to help them when they really need it. Unfortunately for them that means not as many toys as they would like right now. Nice to see we are a lot alike!
I often wonder about #3-we have a rental property with about a 5% interest rate on the mortgage. It seems like a good idea to refinance for a lower mortgage rate, but because we’re paying it off early (5 years max) I’m not sure it’s worth it in the long run. You semi-confirmed this for me. Feel free to check out my journey at http://www.thiswifeslife.com
I’m glad I could help. Nice job on the rental property. Your site is great!
Do you feel better now that your mortgage is paid off? Would it have been so negative for you if you didn’t have children and tried to do the same thing? I am asking because My husband and I are planning to do the same thing but we cannot have children and are ok with that. We have adjusted our lifestyle to fit the situation. Our Cat is our kid now. lol
Hi Jessica! I absolutely feel better now that our mortgage is paid off. I don’t think it would have been negative without the kids. Even before we had kids the idea of being mortgage free floated around our discussions. It was only once we were in our new place with kids did I realize how different things could be with a paid off mortgage. I don’t know if it’s the right thing for you but I don’t regret the choice we made when it comes to paying it off.
I am determined to get our mortgage paid off in 7-8 years on a refi of 15years 2.875 interest. We built our home 2 years ago with a construction loan at an amazing low interest of 3.8, then we refinanced. I love using an ammorization calculator to play around with the numbers. We have 4 children and so far so good. We are on track for our goal of debt free living. Glad others share the same drive.
The wife and I are also pushing nearly everything into our mortgage to get it down asap. Here in South Africa interest rates are quite high (around 10%), so it makes a lot of sense to get rid of our debt first (our only debt left to pay off is the mortgage).
We’re also contributing to other investments (Tax Free Savings Account and Retirement Annuities), but we’re not maxing these out until the house is free and clear.
Good post, thanks for sharing!
I like how you look at it from the other perspective, but I’m sure you will be glad that mortgage is paid off for the rest of your life! Now, it sounds like you might have been a little AGGRESSIVE in paying it down, but that’s another conversation. For me, I think paying down the mortgage is a huge win. Your yearly expenses have just dropped dramatically and your savings rate can go through the roof! Both are huge advantages as your work towards financial independence. As for me, I refinanced the house down to 2 7/8 a couple of years ago and am putting 1/3 of any “extra” money we come into towards the mortgage. The other 2/3 of the money gets spent. I define “extra” money as anything outside of my salary which would include, bonuses, tax returns, my wife’s side-hustle, etc…
Good job paying off the house!