How one couple plans to pay off their mortgage within 10 years

Kristin Swartzlander, 28, and her husband, Carl Bowser, 27, always knew they didn't want to be tied down to a mortgage for long.

"My husband and I have unique careers," says Swartzlander. "I'm a self-employed sports marketing consultant and he's an up-and-coming race car driver - so it is important to us to have very little debt," Swartzlander explains. "We can only take risks in our life if we have assets, not debts, so that's why we're working hard to pay off our home."

With that as a focus, Swartzlander says they took all the necessary steps from the get-go to ensure they could pay off their mortgage in as little time as possible. "My husband and I are planning on paying off our home loan in 10 years or less," she explains.

Here's how they're planning on reaching this mortgage-free goal…

Buying a Foreclosed Home

Although the couple earns approximately $75,000 to $100,000 a year (it varies due to their self employment), they decided that the first step towards becoming mortgage-free fast was to find a low-priced home.

And they did exactly that by purchasing a foreclosed property.

"We purchased a home that was significantly under-valued in our market," Swartzlander explains. "It appraised for $140,000 and we paid $68,000 through a foreclosure auction." Swartzlander says the house sold for a low price because it had a failed septic tank.

The home was a cottage/farmhouse style ranch house with a screened-in porch and a wrap-around driveway in Sarver, Pennsylvania. The four-bedroom home sits on 2.5 acres in a country setting and has a full walk-out basement with a canning cellar and one-car garage.

"We have one bathroom now, but eventually would like to add one more upstairs and one in the basement," Swartzlander says.

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The Loan Process

Because Swartzlander's home was a foreclosed property with a failed septic tank, they were unable to get a loan from a conventional bank.

"A bank generally won't loan on a property unless it's legally livable: A working bathroom, kitchen, and all the fundamentals like plumbing, electrical and septic," explains Swartzlander.

However, because the couple planned to renovate their home, they were able to seek the assistance of a building and loan company

"A building and loan company will loan on homes that are under construction if they can appraise for more than what you're asking to borrow in current condition," she says.

With that in mind, the couple borrowed $88,000: $68,000 to buy the house and an extra $20,000 for repairs and renovations. "We have actually done closer to $24,000 in renovations so far and paid the balance out of pocket," she says.

When the couple closed on the house in March 2012, they also had to pay an additional $3,000 in auction fees and about $2,000 in closing costs, which they financed out of pocket.

Choosing a Short-Term Loan

With their sights on paying the mortgage off fast, the couple knew they wanted to go with a short-term loan. And this was a good thing since their lender only offered 15- or 20-year terms.

"That was fine with us anyway, because we knew it was important to us to pay the house off quickly," explains Swartzlander. "Carl has been racing since 2005 and I've been in business since 2011 so we knew a low mortgage payment and an aggressive payment schedule to reduce our overhead were both important to us."

When it came to picking their loan term, the couple opted for a 15-year fixed mortgage with a 4 percent interest rate. And though their payments are higher on a 15-year loan than it would be on a 20- or 30-year loan, Swartzlander says the overall savings and peace of mind will be worth it.

"If we had gone with a traditional 30-year mortgage, our monthly payment would be lower, but we'd pay $40,000 more in interest," she says.

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Swartzlander is also quick to explain that their interest rate is higher than average for 15-year loans.

"We have a slightly higher interest rate because we went with a building and loan company instead of a bank," she says, adding that building and loan companies can't compete with banks' rates because they don't reinvest their assets as aggressively and don't have the infrastructure of a bank. "The funds in a [building and loan company] are mutually held, meaning that only what's invested by the customers is what's available to loan," she adds.

Making Extra Payments

While their short-term mortgage will force them to pay off their mortgage at a fast pace, the couple is also adding in a few additional steps to reach their goal.

For example, Swartzlander says they always round up their monthly payments to the next hundred dollars. So instead of paying just the required $650 every month on their mortgage, they always pay $700. "That alone will take two years off our mortgage," she explains.

In addition, since the couple is on the bi-weekly payment plan, Swartzlander says they're making two extra payments a year when compared to the monthly payment plan. "That takes another two years off the mortgage!" she explains.

And while their income isn't always predictable enough to make extra payments on a consistent basis, Swartzlander adds that whenever a new client contract comes in, they put that additional income towards the mortgage. According to Swartzlander, that accounts for approximately $1,000 extra in a year.

Living Below Their Means

Swartzlander says they only have one credit card and they pay it off every month. She adds that they're very conscious about eating out.

"We'll do it, but only if it's to spend time together and enjoy a good meal, not just order pizza and takeout because I don't want to cook," she explains.

The couple also saved a lot of money by working on home renovations themselves.

"I also restore furniture so we have nice furniture for little investment," she adds. "Overall, we're really conscious of what we need in this world - we don't buy a lot of non-perishables, as I like to call them - electronics, knickknacks, accessories," Swartzlander explains. "If we spend the money or the time on something, it's going to be good quality and last forever. We don't believe in a throwaway culture."

Their Motivation to Pay Off Their Home Fast

"We purposefully bought our home knowing that we could live in it for the rest of our lives if we wanted to, so that's even more motivation to fix it up and pay it off - we know we're not just going to buy another one," says Swartzlander.

What's more, because they have such unpredictable incomes, Swartzlander says it will give them peace of mind to get rid of their mortgage.

"Having the house paid off quickly will give us equity to borrow on if we need to, or flexibility to travel and pursue our dreams without having to pay for a home," she explains.