The 15-Year Mortgage Rule
Pay off your mortgage in 15 years
The 15-Year Mortgage Rule is a framework for paying off a mortgage in 15 years. This is achieved by making higher monthly payments, which can save the individual hundreds of thousands of dollars in interest payments over the life of the loan. The rule is simple: if you must take out a mortgage, pretend only 15-year mortgages exist.
- Paying off a mortgage in 15 years can save hundreds of thousands of dollars in interest payments.
- Higher monthly payments are required to pay off a mortgage in 15 years.
- Pretending only 15-year mortgages exist can help individuals make smarter financial decisions.
- Determine your mortgage amount and interest rateCalculate your mortgage amount and interest rate to determine your monthly payments. Use a mortgage calculator to determine the monthly payments for a 15-year mortgage.Pro tipConsider working with a financial advisor to determine the best mortgage option for your situation.WarningBe aware that higher monthly payments may be required to pay off a mortgage in 15 years.
- Create a budget and make adjustmentsCreate a budget that accounts for the higher monthly payments required to pay off a mortgage in 15 years. Make adjustments as needed to ensure you can afford the payments.Pro tipConsider reducing expenses and increasing income to make it easier to afford the higher monthly payments.WarningBe aware that making adjustments to your budget may require sacrifice and discipline.
- Make extra paymentsMake extra payments towards your mortgage principal to pay off the loan more quickly. Consider making bi-weekly payments or applying tax refunds towards the principal.Pro tipConsider setting up automatic payments to make it easier to make extra payments.WarningBe aware that making extra payments may require discipline and sacrifice.
Luke and his wife paid off their $200,000 mortgage in 3 years by living frugally and making extra payments.
Sabrina and Doug paid off their mortgage 1.5 years ahead of schedule by following the Baby Steps and making extra payments.
The 15-Year Mortgage Rule was developed by Dave Ramsey as part of his Total Money Makeover program. The rule is based on the idea that paying off a mortgage in 15 years can save individuals a significant amount of money in interest payments and help them achieve financial freedom more quickly.