Eliminate Your Mortgage

Eliminate Your Mortgage

OK, nothing will absolutely eliminate your mortgage (aside from paying it off in full) but you can eliminate the need to make the monthly payments with your own income. A house payment can take an enormous chunk out of your paycheck, and it doesn't have to.

Considering some alternative ways to lower -- or cover in full -- your monthly payments could end up saving you hundreds, even thousands of dollars per year.

Rent a room

Large portions of your mortgage payments could come from taking in borders. Kristi Hunt of Seattle, WA decided to rent out a bedroom in her new house to help lower her monthly house payment and was pleasantly surprised at her savings. Due to a large down payment and an excellent credit rating, Kristi's mortgage payment was lower than what she had been paying in rent for a two-bedroom apartment just three years earlier.

"I rented out one room to a Grad student for two years and it went really well," said Kristi. "I ended up saving about $600 a month and was able to start a small savings account for my young son with the extra cash and not have to worry that the mortgage was falling behind, as the renter paid for it in full each month."

Although your mortgage may not be paid in full each month by taking in a tenant, you can significantly cut your cost by doing so. Also, take into consideration the extra money you will save on utilities, as you will now be splitting the cost with your tenant. It could allow you to pay off your home in five years instead of 10.

Buy a Duplex

The purchase of a duplex can be the answers to your house payment. Just as taking on a tenant in your home (purchasing a duplex and living in one unit while renting out the other), you will often cover or split your payments in half. If you value your privacy and are not thrilled at the idea of renting out the extra unit to tenants for living purposes, consider renting the unit out to a small business.

Grace and Steve of Roanoke, VA rented their extra unit to a local photographer who was looking to move his business out of his basement, but still keep it in an area that was not in the city as the rental prices would be too high. "Renting out the extra unit to a business not only helped pay our mortgage, it also gave us our privacy in the evenings and weekends while significantly cutting our cost on utilities and landscape maintenance," they said.

Invest in your home

Making an addition to your home will cost money up front, but once it is completed, it can help you pay off the building expenses and your mortgage.

Look around your property. Is there a spacious storage shed that can be transformed into a guesthouse? Is it possible to add a studio apartment over the garage? Is there a separate entrance to your finished basement that could become a separate unit for renting? The possibilities are many and of course it all depends on how much you have to invest in your property, but in the long run it could be money well spent. Not only would the eventual tenant help pay off the building costs, contribute to the utility bills and then make a dent in your mortgage payments, but the new addition would add significant resale value to your property should you ever decide to sell.

With each of these examples for decreasing your monthly mortgage payment, there are pros and cons. The pros, obviously, are the inevitable savings incurred by the tenants (personal or business) that will help you to pay off your home in a shorter time span. Also in most cases, there are significant tax write-offs and deductions for taking in a tenant or business within your home or housed on your property (tax benefits vary depending upon your state). The cons include a loss of personal space, the possibility of having a difficult tenant, and in some cases, the added insurance costs that could arise when adding on to your home, or housing a separate business in a unit of the property. These pitfalls can be avoided or lessened with careful interviewing of possible tenants and the implementation of legal contracts for renters/businesses.

You should always consult with your REALTOR® and a real estate lawyer if you are considering using any of the above-mentioned steps to lower your mortgage payments.

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