Published:
November 22, 2019
Last updated:
April 20, 2022
Sammamish Mortgage
5 min read
In This Article
- Rent Out Your Home
- Rent Out a Spare Room
- Create a Rental Studio Apartment
- Rent Components of Your Home
- Use Solar Panels and Water Tanks
- Grow Your Own Food in Your Yard
- Need a Home Mortgage in WA, OR, CO, or ID?
If you, like most homeowners, had to take out a mortgage to buy your home, you might be wondering if there are ways you can take a short cut and make your mortgage pay itself.
The good news is, there are several ways your home can make money for you. However, you may have to do some work, invest some cash, and make a few sacrifices.
Rent Out Your Home
Renting out your home and becoming a landlord is an easy way to bring in some extra cash and make your mortgage pay itself (provided that you have another place to live). If you are moving to another state or country, you’ll need someone to look after your property anyway. Instead of paying someone to do it, your renters can pay you.
The steps to renting out a property are the following:
- Do your research. Learn how to market your home, what kind of insurance policies there are, and what your rights and responsibilities as a landlord are.
- Inform your mortgage lender and insurance provider. They need to know that you are letting out your property.
- Figure out how much you are going to charge your tenants (including the deposit). Making your mortgage pay itself won’t be possible if the rent is too low. You need to be realistic, though.
- Prepare your rental property. Fix or replace anything that is damaged, declutter, clean and decorate your home (or simply get rid of everything and rent it out unfurnished).
- Check if you qualify for any rental property tax deductions and other tax benefits landlords can enjoy.
- Set some ground rules. Make it clear what you expect from your tenants, what is allowed and what isn’t.
- Choose the most reliable tenants. Feel free to check their credit history and public records before letting them move in. After all, they will be occupying your home and your safety comes first.
Rent Out a Spare Room
Another way to make your mortgage pay itself is by renting out a room. The steps are pretty much the same as those for letting out your entire home. If there is a room in your home no one in your family is using, why not let someone else use it? It there isn’t, you can alter your floor plan (put up a wall, for example) to create an extra room. Or, you could do the opposite – live in one room and rent out the rest of your home.
Create a Rental Studio Apartment
The income from renting out living space can significantly reduce your mortgage. You can easily convert unused space into a studio you can rent out to a single person or a student. If creating a studio in your home is not feasible, consider converting your garage or setting up a container home in your backyard. Note that you should be familiar with theregulationsin your area. Before you start building or remodeling, check if you need to get a permit first.
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Rent Components of Your Home
Here are a few other parts of your home that you may want to rent out:
Driveway
In many towns and cities, parking permits can be extremely expensive. Thus, renting out your driveway can be a great source of additional income. Make sure you ask your mortgage company first, as some mortgage providers require their permission for renting out a parking space/driveway.
Garage
We have already suggested converting your garage into a studio. This would require adding a bathroom and a small kitchen. Alternatively, you can turn it into office space for rent. Of course, you can rent out your garage as it is. There are many people in need of a safe place to keep their car or other items. This is the cheapest option since you wouldn’t have to make any major changes.
Swimming pool
This is a bit trickier and less conventional but if you have a pool in your yard, why not rent it to a swimming or aerobics instructor? Similar to renting out any other part of your property, renting out a pool requires preparing a written contract for its users to sign. In the contract, you should specify all your terms and conditions, such as the time when it can be used, what kind of vehicles can be parked, as well as insurance details.
Use Solar Panels and Water Tanks
The money you save by reducing your electricity bill can be directed to mortgage payments. The same goes for water. You can use the water tank you have installed for outdoor purposes, such as washing your car or watering your garden. It is amazing how these small changes can help ease your financial burden in the long run.
Grow Your Own Food in Your Yard
Creating a vegetable garden or an herb garden in your backyard would not only reduce your food bill but also help you earn extra money. You do not even need a spacious yard. Although a garden may not bring you big money right away and make your mortgage pay itself, if you are patient, that money will add up over time.
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Sammamish Mortgage is a local mortgage company serving the broader Pacific Northwest region, including Washington state, Idaho, Colorado, and Oregon. We are proud to offer a wide variety of mortgage programs and products with flexible qualification criteria since 1992. Please contact us if you have any questions or are ready to apply for a home loan.
FAQs
Making additional principal payments will shorten the length of your mortgage term and allow you to build equity faster. Because your balance is being paid down faster, you'll have fewer total payments to make, in-turn leading to more savings.
How can I pay off my 30 year mortgage in 10 years? ›
Here are some ways you can pay off your mortgage faster:
- Refinance your mortgage. ...
- Make extra mortgage payments. ...
- Make one extra mortgage payment each year. ...
- Round up your mortgage payments. ...
- Try the dollar-a-month plan. ...
- Use unexpected income. ...
- Benefits of paying mortgage off early.
Making additional principal payments will shorten the length of your mortgage term and allow you to build equity faster. Because your balance is being paid down faster, you'll have fewer total payments to make, in-turn leading to more savings.
How to pay off a 300k mortgage in 5 years? ›
There are some easy steps to follow to make your mortgage disappear in five years or so.
- Setting a Target Date. ...
- Making a Higher Down Payment. ...
- Choosing a Shorter Home Loan Term. ...
- Making Larger or More Frequent Payments. ...
- Spending Less on Other Things. ...
- Increasing Income.
Throwing in an extra $500 or $1,000 every month won't necessarily help you pay off your mortgage more quickly. Unless you specify that the additional money you're paying is meant to be applied to your principal balance, the lender may use it to pay down interest for the next scheduled payment.
What happens if I pay $500 extra a month on my mortgage? ›
Making extra payments of $500/month could save you $60,798 in interest over the life of the loan. You could own your house 13 years sooner than under your current payment.
Is there a downside to paying off a mortgage early? ›
Paying off your mortgage early is a good way to free up monthly cashflow and pay less in interest. But you'll lose your mortgage interest tax deduction, and you'd probably earn more by investing instead. Before making your decision, consider how you would use the extra money each month.
How many years will a 2 extra mortgage payment take off? ›
Faster Loan Payoff
By making 2 additional principal payments each year, you'll pay off your loan significantly faster: Without extra payments: 30 years. With 2 extra payments per year: About 24 years and 7 months.
What happens if I pay an extra $3000 a month on my mortgage? ›
The additional amount will reduce the principal on your mortgage, as well as the total amount of interest you will pay, and the number of payments. All fields are required.
What happens if I pay an extra $200 a month on my 15 year mortgage? ›
If you pay $200 extra a month towards principal, you can cut your loan term by more than 8 years and reduce the interest paid by more than $44,000. Another way to pay down your mortgage in less time is to make half-monthly payments every 2 weeks, instead of 1 full monthly payment.
- Refinance to a shorter term. Refinancing your mortgage to a shorter term involves replacing your existing loan with a new one and paying more per month. ...
- Apply cash windfalls to your principal balance. ...
- Make biweekly payments. ...
- Pay more than your monthly payment. ...
- Recast your mortgage.
But with nearly two-thirds of retirement-age Americans having paid off their mortgages, it means that the average age they have gotten rid of that debt is likely in their early 60s. Stats from 538.com, for example, suggest the age is around 63.
What is the average monthly mortgage payment on a $300000 house? ›
The monthly payment on a $300,000 mortgage depends on what interest rate you get and the term you choose. On a 30-year loan at a 7% rate, it would be $1,996 per month toward your principal and interest. Keep in mind that you also have to pay for expenses such as homeowners insurance and property taxes each month.
Is $2,000 a month mortgage high? ›
$2,000 Mortgages Are More Common Than You Might Think
After factoring in property taxes, the data reveals that it's still possible to buy a house in a little more than half the country — 28 states — with a monthly budget of $2,000.
What happens if I make two extra mortgage payments a year? ›
By making two extra mortgage payments a year, you're prepaying principal that would otherwise accrue interest over the life of the loan. Plus, those payments are accelerating repayment because they're payments you would have made anyway.
When should you not pay extra on a mortgage? ›
You have high-interest debt.
Rather than make extra payments toward your mortgage principal, consider paying down high-interest debt first. This can include credit card, student loan, medical, and car loan debt, just to name a few.
What happens if I pay half my mortgage every two weeks? ›
Your lender or servicer allows biweekly mortgage payments. Your extra payments are applied to the loan principal. You won't be charged a prepayment penalty or fees for setting up or maintaining the payment plan. Your interest rate won't change (unless you have an adjustable-rate loan).
Does Dave Ramsey recommend paying off a mortgage? ›
Paying off your mortgage early will rev up your wealth building.” However, one of his more controversial pieces of advice revolves around not paying off your mortgage early, even if you can do so. This advice counters the traditional wisdom of becoming debt-free ASAP.
Can I pay my house in 10 years? ›
“The stock market averages a higher return than the interest rate on a mortgage. A homeowner could invest the difference between a 30-year payment and a 10-year payment into the market and then take the invested amount and pay off the loan at the end of the 10th year.”
What is the 10 15 mortgage rule? ›
The premise is simple: pay an extra 10% of your monthly mortgage payment toward the principal each week, which can allow you to pay off the loan in approximately 15 years while lowering the amount paid toward interest.
