Homeownership: The Ultimate Ways to Be “Free and Clear” More Quickly

Home » Homeownership: The Ultimate Ways to Be “Free and Clear” More Quickly

There is no denying that a house is the most expensive possession Oklahomans could own. Although pieces of real estate are generally bought on credit, it is not uncommon for homeowners to grow old without ever repaying their debt completely. With products like reverse mortgages widely available, home loans could outlive the people who borrowed them.

Nevertheless, any honest OKC and Tulsa mortgage lender will tell you that some homeowners manage to be free and clear. According to the recent Zillow study, 37% of American homeowners no longer owe on their property. If you want to pay off your home loan as soon as possible, stick to these strategies:

Avoid an Oversized Property

Rule number one is not to buy a house that is too big for your family. It may be wise to buy a bigger property to make room for the children you plan to have in the future, but overdoing only makes it harder to repay your mortgage over the long term.

A smaller house is less costly, so it helps you keep your loan balance to a minimum. A relatively small mortgage size lessens the risk a lender has to take, which in turn may lower your overall interest. Smaller principal and interest means more affordable monthly repayments.

Borrow Less

Make it a goal to put down a large amount of money. A big down payment not only reduces your loan size, but also eliminates private mortgage insurance (PMI), a requirement expense if you borrow more than 80% of the house’s price. If PMI is unavoidable, a large down payment allows you to cancel it more quickly.

Furthermore, borrowing less by putting down a lot of cash lets you build a ton of equity right from the start. It gives you the flexibility to resell your property later and use the profit to buy a more affordable one when you become an empty nester in the future.

Aim for a Short Term

Of course, 15-year mortgages mature faster than their 30-year counterparts do. A short term reduces your interest too, for the owner of your loan only has to wait 180 months (instead of 360) to be repaid.

A 15-year mortgage is not without drawbacks. It naturally makes your repayments larger because you have less time to pay everything you owe. However, if you are serious about being free and clear in no time, this is the route to take.

Pay Extra

Making extra payments allows you to pay off your mortgage ahead of schedule. The additional money you put in your house go towards the principal, which is the actual amount you owe. As your principal shrinks, so do the interest since it is calculated based on the principal in the first place. Not all financial institutions allow prepayment with a penalty, so shop around to find the right lender.

Do Not Refinance

Couple relaxing in their own house

Last not but least, avoid any home equity loan. Borrowing against your house again in the future increases your debt and reduces the equity built on it. As a result, your mortgage re-grows and keeps you indebted for a longer time.

Many of these strategies are difficult to pull off, to say the least, but nobody said they are easy to do. If it is highly improbable for you to do them all, find a healthy trade-off among them to put yourself in a good position to shorten your mortgage repayment period.


Real Estate Redefined.

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