According to author and co-founder of AE Wealth Management David Bach, "buying a home is the escalator to wealth in America." Homeownership can also help you retire early, the self-made millionaire tells CNBC Make It. That is, if you pay your mortgage off.
"I can tell you, having been a financial advisor at Morgan Stanley, my clients who retired at 50 years old, the secret was: They had paid their mortgage off early," says Bach.
Take out a 30-year mortgage, he says, but with the intention of paying it off in 25, 20 or ideally, 15 years. To do so, start by reviewing your last payment, Bach writes in "Smart Couples Finish Rich." "Now take that number and add 10 percent to it. That's how much you're going to send the bank next month, and every month thereafter."
For example, if you were paying $1,000 a month, now you're going to make $1,100 payments every month.
"Inform the bank that you are doing this and that you want the extra $100 a month to be applied to the principal (not the interest)," notes Bach. "If you keep this up, you'll wind up paying off your 30-year mortgage in about 25 years. Increase your monthly payment by 20 percent, and you'll have that mortgage retired in about 22 years."