Paying off a 30 Year Mortgage in 5 Years

(Scroll down to the bottom to see Mortgage Goal Progress)

I set a goal to pay off the mortgage by 2020. Now it’s time to think about what it’s really going to take, and how I’m going to do it.

First, let me address something briefly.

Doesn’t investing provide a better return on investment than paying down the mortgage?

Yes, it does. I’ve read plenty of personal finance books, websites, blogs, etc. I understand that expected returns for investing are north of 8%, 10% or even 12%. I understand that I’m only getting a return of less than 3% by paying down the mortgage, once you factor in the tax deduction for mortgage interest. I understand that I am potentially “missing out” on 6-10% compounding over 5 years on over $100,000. I should be investing instead of paying down the mortgage.

But let me explain why I won’t be doing that. Expected returns aren’t guaranteed returns. The market could take a wild downswing, and those expected returns can turn into real losses.

Think of it this way. You are completely debt-free. Would you borrow $178k at 3.25% so you could possibly gain about 8-12% on it? For most, the answer would be a resounding “YES, PLEASE! WHERE DO I SIGN?!” For me, the satisfaction of being completely debt-free is worth much more to me than taking on debt to potentially have an additional few thousands of dollars.

The rich rule over the poor, and the borrower is slave to the lender. -Proverbs 22:7

With that being said, I want to say that I do believe in investing. All of my retirement accounts as well as my wife’s retirement accounts are invested in the market (stocks and mutual funds). We continue to invest 15% or more of our income plus employer match into retirement accounts. I’m just saying I don’t want to use debt as a tool to invest.

What will it take to pay off the mortgage in 5 years?

It’s February 2016, and the mortgage balance is currently $178,304. I have to pay it off in 58 months to reach my goal by 12/31/2020.

$178,304 / 58 = $3074.21, and that’s not factoring in interest.

The current principal and interest payment (P+I) is $827.76. According to the amortization estimator I’m using, if I pay an additional $2,500 in principal every month in addition to the regular monthly payment, the last payment will be due on 12/1/2020.

In addition to the big goal I set, I’ve set some intermediate goals to ensure I’m on pace for achieving the goal.

I’ll keep track of my goal of paying off the mortgage below. The negative number in green in the far right column is the amount of principal paid down in that month.

Month Months left Intermediate goal Actual balance On pace for goal
2/19/2016 58 $178,304 $178,304 Yes
3/18/2016 57 $176,700  $174,480  Yes: -$3,824
4/19/2016 56 $173,600 $169,993  Yes: -$4,487
5/17/2016 55 $170,500 $167,000 Yes: -$2,993 
6/20/2016 54 $167,400 $159,900   Yes: -$7,100
7/19/2016 53 $164,300 $158,000   Yes: -$1,900
8/22/2016 52 $161,200  $157,000  Yes: -$1,000
9/20/2016 51 $158,100 $156,597  Yes: -$403 
10/27/2016 50 $155,000 $156,193   No: -$404
11/21/2016 49 $151,900  $155,789 No: -$405
12/19/2016 48 $148,800  $155,000  No: -$789
1/19/2017 47 $145,700  $154,000  No: -$1,000
2/17/2017 46 $142,600 $153,589  No: -$411
3/17/2017 45 $139,500 $152,177  No: -$1,411
4/19/2017 44 $136,400  $145,745  No: $6,432
5/15/2017 43 $133,300   $143,909   No: $1,837
6/19/2017 42 $130,200   $143,471    No: $438
7/17/2017 41 $127,100  $142,472 No: $999
8/21/2017 40 $124,000  $137,000 No: $5,472 
9/19/2017 39 $120,900  $129,416 No: $7,584 
10/19/2017 38 $117,800
11/19/2017 37 $114,700
12/19/2017 36 $111,600
1/19/2018 35 $108,500
2/19/2018 34 $105,400
3/19/2018 33 $102,300
4/19/2018 32 $99,200
5/19/2018 31 $96,100
6/19/2018 30 $93,000
7/19/2018 29 $89,900
8/19/2018 28 $86,800
9/19/2018 27 $83,700
10/19/2018 26 $80,600
11/19/2018 25 $77,500
12/19/2018 24 $74,400
1/19/2019 23 $71,300
2/19/2019 22 $68,200
3/19/2019 21 $65,100
4/19/2019 20 $62,000
5/19/2019 19 $58,900
6/19/2019 18 $55,800
7/19/2019 17 $52,700
8/19/2019 16 $49,600
9/19/2019 15 $46,500
10/19/2019 14 $43,400
11/19/2019 13 $40,300
12/19/2019 12 $37,200
1/19/2020 11 $34,100
2/19/2020 10 $31,000
3/19/2020 9 $27,900
4/19/2020 8 $24,800
5/19/2020 7 $21,700
6/19/2020 6 $18,600
7/19/2020 5 $15,500
8/19/2020 4 $12,400
9/19/2020 3 $9,300
10/19/2020 2 $6,200
11/19/2020 1 $3,100
12/19/2020 0 $0

29 thoughts on “Paying off a 30 Year Mortgage in 5 Years

  1. love the blog! Love the plan! I have a less ambitious goal of paying off the mortgage by the time the kids start college. We chose not to fund a 529 plan and put the same amount of money towards the mortgage. Our debt-free house should be worth more than a 529 by that time. Plus, we’ll enjoy the benefits even after the kids’ college years.

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