Is this an attainable goal for you?
- shark tank‘s Kevin O’Leary was a big fan of debt reduction at a relatively young age.
- With the right strategy, you can pay off your mortgage sooner than expected.
Americans are no strangers to debt. Many consumers owe money on mortgages, car loans, and credit cards, to name a few sources, and don’t really give it much thought.
But if you want to live a life of financial freedom, it’s important to get rid of all your debt, says shark tank personality Kevin O’Leary. In fact, O’Leary insists it’s a good idea to be debt-free by age 45 — and that includes paying off your mortgage.
Of course, it’s one thing to get rid of a credit card balance before age 45. But many people don’t buy a home until they’re in their thirties. And those who fund it with a 30-year mortgage aren’t usually able to get out of debt in their mid-40s.
But if one of your goals is to get rid of your mortgage debt by age 45 (or somewhere around that), then there’s are steps you can take to make this more feasible. Here are a few to consider.
1. Refinance when interest rates become more favorable
Right now, borrowing rates are up across the board, so it’s usually not a good time to refinance a mortgage. But if rates go down, you may be able to lower the interest rate on your home loan, making it easier and cheaper to pay off.
2. Start with a 15-year mortgage
When you take out a 15-year mortgage, you will face much higher monthly payments than with a 30-year mortgage. But the upside is that you’ll usually qualify for a much lower interest rate on your mortgage, and you’ll also pay less interest in total.
Maybe your mortgage payment is $1,200 a month. If you can afford to spend $1,500, don’t just put that extra $300 in your savings account (unless you need to build an emergency fund). Instead, send that money to your loan officer to pay off your mortgage balance.
4. Put deals in your mortgage
You can earn extra money here and there, whether it’s a tax refund, a bonus from your job, or a generous gift from a wealthy family member. If you don’t need the money for other purposes, it’s beneficial to put it directly into your mortgage so you can pay down that balance.
Is it feasible to be mortgage free at 45?
If you take out a large mortgage at age 39, it can be quite difficult to get rid of it within six years. On the other hand, if you’re buying a home in your late 20s or early 30s, it may be paid off in your mid-40s if you’re willing to make it a priority.
But if you don’t want to do it, or if you just can’t do it, try not to stress about it. Sure, there’s something to be said for being completely debt free at 45, but remember that mortgage debt is considered a healthy type. And many homeowners continue to make mortgage payments well into their 50s and 60s. Some people even took out a mortgage during their retirement.
There’s nothing wrong with doing your best to pay off your mortgage before your mid-40s. But if that doesn’t happen, rest assured you’ll be in good company.
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