Why I switched to a 15 year mortgage

I'm in the process of getting my mortgage refinanced from a 30 year into a 15 year. I'm doing this because I'm trying to pay off my mortgage in 10 years. I set this goal because an average millionaire pays off his or her mortgage off in 10.2 years. I want to be better than the average millionaire and pay it off in 10 years flat (or sooner). There's a lot steps to reaching this goal, but refinancing is the first. I'm actually not sure what the next steps will be yet, but I'm okay with that. I'll figure out the next steps after I'm done this one. I know at some point I'll need to increase my income, but you get a lot more done if you focus on one step at a time.

Another reason I want to pay it off as early as I can is to gain more financial freedom. An enormous part of my monthly income goes straight toward my mortgage. After the refinancing is done, about 55% of my monthly income will go toward my mortgage. I'm not happy about this. I'd rather it be closer to 25%, but the home is expensive and I made some mistakes as a first time home buyer. Regardless, switching to a 15 year will help fix some of those mistakes. I'll end up paying my home off sooner too. Once my home is paid off, I will gain an enormous amount of financial freedom.

The way I look at the mortgage payment is in two parts: the investing part and the rent. Any principle is investing. The interest, taxes, and insurance are the rent. Looking at it this way helped me make the decision to switch to a 15 (and I would have switch to a 10 if I could afford it). On a 30 year, my mortgage payment is about $3170. Breaking that down, about $2651 is the rent (taxes, interest, and insurance) and $519 is how much I'm investing every month. I could get a lot nicer apartment for $2651 per month than what my house is (not as large, but nicer for sure).

On a 15 year mortgage, my payment would be about $3825 per month. However, my rent would decrease to $1995 per month, almost $700 less than what it is on a 30 year! Also, I'm now investing $1830 per month, about $1200 more!! This difference is huge and one of the biggest reasons I refinanced into a 15 year.

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