Secrets to paying off a mortgage in 10 years

Katie Johnson with her dog

Katie and John Johnson were newlyweds in August 2003 when they borrowed $205,000 for their Salem, Ore., home.

Just nine years and a dachshund later, they’re counting down to their final mortgage payment.

"I think it will feel really good," Katie says of the May 2013 milestone. "We’re looking forward to the next goal."

So what's this couple's secret?

Katie, 35, and John, 49, have taken an aggressive approach to paying off their loan.

Today, they pay thousands of dollars more to their lender each month than they're required to. Over time, as they've retired other debts and earned more income, they've gradually increased payments. (Read our 3 free ways to pay your home loan faster for more tips.)

Katie, a civil engineer with the state of Oregon, and John, a federal aid highway program construction specialist with the state, initially had two mortgages.

The Johnsons had taken out the second home loan so they could avoid paying private mortgage insurance, because their down payment was less than 20% of the sale price of the home.

Their first mortgage, a 30-year, fixed-rate loan for $173,000, is the one they’re about to pay off. It carries an interest rate of 4.875% and a monthly payment of just over $900.

The second mortgage, a 15-year balloon loan for $32,000, charged 8% interest and a monthly payment of about $200.

"We attacked that one aggressively," Katie says.

Pay early, save big on your $200,000 home loan

Extra annual payments Interest paid Savings Payoff time
$0 $124,117 $0 30 years
$900 $106,988 $17,129 26 years, 3 months
$1,800 $94,259 $29,858 23 years, 5 months
$2,700 $84,398 $39,719 21 years, 1 month
Source: mortgage calculator.

Katie admits the thought of being stuck with a large payment at the end of the balloon loan made her nervous.

The Johnsons immediately began paying an extra $110 a month toward the balloon loan's principal, which they bumped up to an extra $350 a month in 2004.

Later that year, they made a lump-sum payment of $4,000 and also upped their monthly payment to $512.

At the same time, the couple began paying an additional $85 a month on their 30-year loan.

Katie and John were able to increase their monthly payments after they paid off an auto loan and when they each earned cost-of-living raises.

The Johnsons figured they were already used to living without the extra income so wouldn't miss the additional cash.

They made the lump-sum payments from savings, because their regular contributions weren't earning enough interest to justify maintaining a large balance.

By 2006, the Johnsons were paying an extra $862 a month on the 15-year balloon loan and that December made a lump-sum payment of just over $5,000 to pay it off.

They rang in 2007 with only their 30-year loan and — again applying their we-won’t-miss-what-we-never-had principle — began paying an extra $1,200 a month, for a total payment of $2,100.

In 2010, they added another $1,000, for a monthly total of $3,100.

"That will take us to the end," Katie says. "We’ll have it paid off in May of 2013 on that schedule."

To help the countdown, she created an amortization table and crosses off each month after they make their payment.

"This last part is very fun, to actually get to the very end," she says.

Katie says that only having house debt has made their aggressive payoff plan possible.

While the Johnsons use credit cards, they pay the balance in full every month. They also save up for big purchases, like their annual vacation to Hawaii, instead of charging them.

The couple also eats at home the vast majority of time and avoids paying for a gym membership by running outside for exercise.

"Our standard of living is really comfortable," Katie says. "We don’t go without anything, and we do have those times when we have fun."

When the Johnsons no longer have a house payment, they plan to treat themselves to a new mattress and perhaps a cruise.

After that, they’ll boost their emergency savings and retirement account contributions, Katie says, and then start saving to either build a home or buy a vacation home.

The Johnsons’ tips for paying off a loan early:

  • cheri wade

    pay every two weeks and u will save years of payments.

  • Julie L.

    We have 3 kids and will pay off our 15 year mortgage 8. Set a budget in writing and stick to it.

  • herbgal1

    Everyone's thoughts echoed's easy without children....but definitely not worth it My life has been greatly enriched by both my children and grandchildren.
    With that said, my mortgage has a interest rate below 5% and will get paid off.

  • geri

    hooray for them! they should be so proud of themselves, kids or no kids, one can do it, if only they would not buy so much " junk" for their kids, i know, i stopped getting those burgers or those i want i want stuff, i let my kids go outside and play just like the good old days, no junk! just fresh air , running dog, walking, free swings at park, you get the picture. I do not use my kids as an excuse, for saving, if one cannot afford kids don't have them.

  • Retail

    Great job!! We did everything we wanted with children, now they are grown we are close to retirement age and need to get rid of this debt. We will try this again while we still have time. Motivated. Congratulations

  • paul

    refrain from spending on non-essential items, put money into mortgage. the feeling of paying it off early is UN-describable to debt holders. paid off my home and child support, a house will never abandon you.

  • Matt

    If I paid the EXTRA $2,200 per month that they are It would cost the entire household income. Yeah...that seems practical. I will pay off the mortgage in ten years but I won't have eaten in that same time frame.

  • gail

    What an awesome and inspiring story. God Bless this couple as they embark on their next endeavor.

  • Shari

    Hats off to them. The most important point to take here is to have a plan and work that plan. Unfortunately, too many people are addicted to the instant gratification of credit cards and can't even tell you what they spend all their money on. Katie & John will have the security of "owning" their home.

  • Micah

    Secrets to paying off a mortgage in 10 years?

    Try no kids and a two state jobs.

  • Cheryl

    Has anyone done the math on what losing the mortgage interest deduction will do to their taxes? Seems like paying higher taxes for the next 30 years might make paying off the mortgage look a little less enticing.

  • Len Lewicki

    But I wonder about their retirement savings....if they stinted on their retirement savings while essentially putting all that money into the house, they'll never catch up.

  • Kent

    There are some in the finance industry right now who are not touting paying off a loan this radically--with the continuing instablilty in how homes will increase in value or won't some are saying there are "better" investments. that said, I am paying down a 15 year fixed with extra payments each month to bring it to a 12.5 year loan.

  • Jeff

    It helps to think of it in terms of how much you'll save in interest rather than how quickly the home is paid off. Several websites let you punch in "what-if" stats to see how much you could save by paying more now. For my home, paying just an extra $200/month will save me more than $40,000 in interest over the course of the mortgage. I doubt I'd see such a return on my 401k.

  • Peter Jennings

    Get real. Who else has two state gov't jobs, two state gov't pensions, no kids, and no college tuition? Here that sound? It's the fiscal cliff coming ....

  • mario

    that's just wonderful, it makes me so happy to know that we're paying taxes sufficient for two government workers to pay off their mortgage in one-third the time. We should all be so proud of ourselves.... what a joke

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