Kevin O'Leary Says Homeowners Should Be Mortgage-Free by Age 45. Here's How to Pull That Off
- Shark Tank's Kevin O'Leary is a big fan of shedding debt at a relatively young age.
- With the right strategy, you can pay off your mortgage ahead of schedule.
Is that an attainable goal for you?
Americans aren't strangers to debt. Many consumers owe money on mortgages, auto loans, and credit cards, to name a few sources, and don't really think much of it.
But if you want to live a life of financial freedom, then it's important to shed all of your debt, says Shark Tank personality Kevin O'Leary. In fact, O'Leary insists that it's a good idea to be debt-free by age 45 -- and that includes having your mortgage paid off.
Of course, it's one thing to shed a credit card balance by age 45. But many people don't first buy a home until they reach their 30s. And those who finance it with a 30-year mortgage generally aren't able to be housing debt-free by their mid-40s.
But if getting rid of your mortgage debt by age 45 (or somewhere in that vicinity) is a goal of yours, then there are steps you can take to make that more feasible. Here are a few to consider.
1. Refinance when interest rates get more favorable
Right now, borrowing rates are up across the board, so it's generally not a good time to refinance a mortgage. But if rates come down, you may have an opportunity to lower the interest rate on your home loan, thereby making it easier and less expensive to pay off.
2. Start out with a 15-year mortgage
When you take out a 15-year mortgage, you'll face much higher monthly payments than you will with a 30-year loan. But the upside is that you'll commonly qualify for a much lower interest rate on your mortgage, and you'll also pay less interest in total.
3. Put extra money into your mortgage each month
Maybe your mortgage payment comes to $1,200 on a monthly basis. If you can afford to spend $1,500, don't just stick that extra $300 into your savings account (unless you need to build an emergency fund). Instead, send that money along to your loan servicer to pay down your mortgage balance.
4. Put windfalls into your mortgage
You may come into extra money here and there, whether it's a tax refund, a bonus from your job, or a generous gift from a well-off family member. If you don't need that cash for other purposes, it pays to put it directly toward your mortgage so you can get that balance whittled down.
Is being mortgage-free by age 45 doable?
If you take out a large mortgage at age 39, then shedding it within six years may be quite difficult. On the other hand, if you buy a home in your late 20s or early 30s, it may be possible to have it paid off by your mid-40s if you're willing to make that a priority.
But if you're unwilling to do so, or you simply can't, then try not to stress over it. Sure, there's something to be said for being completely debt-free by age 45, but do remember that mortgage debt is considered a healthy type to have. And many homeowners continue to make mortgage payments well into their 50s and 60s. Some people even have a mortgage during retirement.
There's nothing wrong with trying your best to knock out your mortgage by your mid-40s. But if that doesn't end up happening, rest assured that you'll be in good company.
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