I heard yesterday a couple facts. To me, these are scary:
- 90% of mortgages are 30 years.
- Most 30 year mortgages don't have half their principal paid off until about 21-23 years into the mortgage. The rest of the first ~22 years is all interest!!
- The new trend in interest only mortgages has people not paying off half their mortgage principal until 24-26 years into their 30 year mortgage.
- 95% of Americans consider themselves not in debt if they have a mortgage.
One thing I firmly believe, everyone should establish a goal when to pay off their mortgage. Of course, that goal shouldnt be in 30 years either. As Heather and I plan for college savings, one thing is evident. If our money wasn't tied up in our mortgage, we could more easily pay for our child's education. We could also save more for retirement and possibly retire earlier. We could go on more family trips and do all sorts of things.
Two weeks ago we didn't have a goal to pay off our mortgage. We are far from perfect. But, now our goal is to pay off our mortgage in 15 years. Since we have been in the house 1 year, this would be 14 years earlier than our mortgage. I hope we can do it..and we will try hard. If we are able to do it, our daughter will be 15 and we will have a few years of being abble to save a lot of money for her to go to college. We aren't throwing away other savings to get their either...we are still going to be saving aggressively for her college. But, as we do so we will also be trying to pay off our house to free up that cash.