While renters dream of buying a home, homeowners dream of the day they pay off the mortgage and own the property debt-free. It's not an easy goal to accomplish, but here, three homeowners explain why they wanted to pay off the mortgage -- and how they did it.

Pay Off Mortgage Before Retirement

Phil Lobel, 52, has a conservative approach to money that largely explains why he repeatedly refinanced his mortgage over a 20-year period, reducing the interest rate and shortening the term until his loan was paid in full.

"Even though everybody else seemed to take cash out and buy fancy cars and more real estate, I said, 'What happens when the real estate drops (in value) or you reach your balloon payment on the five-year term and the low rates are over?'" he says.

Lobel, a public relations professional in West Hollywood, Calif., describes his home as a bungalow/cottage that includes a main house with two bedrooms and one bathroom. The home includes a garage that's been converted into a one-bedroom, one-bathroom guest house. The total space is about 1,500 square feet on a 4,000-square-foot lot, Lobel says. He estimates the market value at $900,000.

His initial mortgage, taken out in 1993 as part of the $280,000 purchase price, had an interest rate of 7.34% and a 30-year term. His second loan, obtained a few years later, had a rate in the 6% range and a 20-year term.

His last loan, originated in the early 2000s, had a rate slightly lower than 5% and a 10-year term. Along the way, his payment increased in increments of 10% to 20%, and at times, he added as much as $700 extra to his payment to reduce the principal.

"I had the cash, and instead of spending it frivolously, I felt this was a wise way to go," Lobel says. "I wanted to have a home free and clear when I retire and not have any mortgage."

Pay Off Mortgage to Prep for College

Wendy Kerschner, 37, and her husband, Ken, 42, paid $155,000 to buy their house in 1997. They expect to pay off their $124,000 purchase-money mortgage next summer, a year before the eldest of their two sons completes high school and begins college. The house is a two-story stone Colonial with four bedrooms and 1 1/2 bathrooms in Lancaster County, Pa.

"Four years ago," Wendy Kerschner says, "I went to the bank and said, 'What do I need to do to make sure my mortgage is paid off by the summer of 2014?' The bank told me I needed to provide an extra $200 per pay. That meant $400, or sometimes $600, a month because we pay biweekly."

Wendy Kerschner says she and her husband could "easily afford" the extra money, despite their modest incomes -- he's a schoolteacher, and she's a sales and marketing assistant -- due to decades of careful spending habits.

The Kerschners were house-poor for their first two years of homeownership because of a car loan, Wendy Kerschner recalls. Once that was paid off, she says, they had "$400 of play room" in their monthly budget. That spare cash wasn't applied to the mortgage immediately, but combined with pay raises over the years, it enabled them to make the extra payments when they were ready to do so.

"I am very frugal, but not that it hurts my lifestyle or makes me stand out in a crowd," Wendy Kerschner says. "We take vacations -- we go to water parks or amusement parks or camping, but we have never spent (much money) on the vacation. Our children have never been on an airplane."

Pay Off Mortgage to Downsize

Patrick Mellody, 54, and his wife, Vickie, 53, took a two-step approach to mortgage freedom: First, they paid off $50,000 of a $130,000 home loan, then they sold that home and used the equity cushion to pay cash for their current home.

The property they bought in 1992 and sold in 2006 was a 3,200-square-foot house with four bedrooms, two bathrooms, what Patrick Mellody describes as an "enormous" great room and an in-law apartment.

The replacement property, bought in 2006, is a 1,200-square-foot town house with three bedrooms, 1 1/2 bathrooms and a nearby park. Both properties are in the suburbs of Buffalo, N.Y.

"We only paid $82,000," Patrick Mellody says. "It was an amazing deal."

The Mellodys aren't big earners. He's a sales manager for a company that distributes bakery ingredients, a self-described "volunteer budget coach" and the author of " The Unemployment Budget," a book about household budgeting for unemployed workers . She's an office administrator for an oil and gas association.

To chip away at their mortgage, Patrick Mellody says the couple paid off other bills, mostly credit cards and car loans, then applied the extra money from those extinguished debts to their home loan. They also refinanced, lowering their rate from the 8% range into 6% territory and shortening their term from 30 to 15 years.

"Sometimes I was paying an extra $1,000 a month," Patrick Mellody says. "I set a goal to be debt-free by the time I was 49, and one month before that date, I wrote a check (to buy the town house). It was a wonderful feeling and has been ever since."

Copyright 2012, Bankrate Inc.