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View Poll Results: Do you make extra principal payment?
Yes 18 58.06%
No 13 41.94%
Voters: 31. You may not vote on this poll

 
 
Old 03-18-2010, 09:50 AM
 
932 posts, read 2,916,259 times
Reputation: 315

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In another thread, some implied making extra payment is not a good idea, which I disagree. So I'm curious about what my fellow CDers are doing.

Of course, I'm not asking whether it's better or not to make extra payment. Each case has different answer.

Last edited by acegolfer; 03-18-2010 at 10:06 AM..
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Old 03-18-2010, 09:59 AM
 
3,648 posts, read 9,333,036 times
Reputation: 1735
It' not a good idea if a person has any other debt. Better to payoff/paydown higher rate non-tax dedutible debt than a low rate mortgage.
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Old 03-18-2010, 10:03 AM
Status: "Reality mode" (set 8 days ago)
 
Location: Jollyville, TX
3,078 posts, read 7,233,214 times
Reputation: 2583
I don't. I don't have any debt to pay down other than a car payment at 0.9%. However, I have 50% equity in my home and no chance of paying it off before I sell it and move, so it doesn't make any sense at all for me to add equity in my house when I could contribute that amount to my 401K or Roth IRA.
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Old 03-18-2010, 10:24 AM
 
Location: Plano, Texas
1,676 posts, read 5,451,062 times
Reputation: 672
Quote:
Originally Posted by Moonlady View Post
I don't. I don't have any debt to pay down other than a car payment at 0.9%. However, I have 50% equity in my home and no chance of paying it off before I sell it and move, so it doesn't make any sense at all for me to add equity in my house when I could contribute that amount to my 401K or Roth IRA.

You are 100% correct. I dont pay extra either.
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Old 03-18-2010, 11:58 AM
 
Location: Clayton, NC
501 posts, read 1,207,385 times
Reputation: 395
I pay an extra $1.80 every month so my bank draft will be a round number.

It's my Accounting background. We have a thing about change.
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Old 03-18-2010, 01:52 PM
 
Location: Vancouver, WA
36 posts, read 161,800 times
Reputation: 19
I plan to since I have no other outstanding debt. I did the math and if I match my extra payment to what I am put away in savings each month I can shorten the life of the loan by a half and save a bucket load in interest.
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Old 03-18-2010, 03:01 PM
 
14,150 posts, read 25,790,873 times
Reputation: 13153
It really depends on your interest rate whether or not it is worth it. I personally don't and never plan on doing it, because at 5.25% I can get a much better return on my money elsewhere.

If your investment/savings vehicle can't get you more of a return then your mortgage interest rate, then it may be worthwhile to pay down the principle, but it is probably a better idea to shop for a better investment.

I have always been a firm believer that money in my hands today, working for me, is worth a lot more than equity in a home that is entirely dependent on what my neighbors decide to sell their homes for.

Just remember that by saving and earning a return on the money, you can still accompish paying off the loan early (if that's your goal) when you have saved enough to pay the balance on the mortgage and you will be able to do it sooner with the better returns you get through your investments.
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Old 03-19-2010, 10:47 AM
 
Location: Boise, ID
6,921 posts, read 15,949,830 times
Reputation: 7012
Husband and I intend to stay in our house for a long time, and I'm working very hard to be debt free by 40 (I'm 31 now), so I am making extra payments. For the first 6 years, I was paying off all our other debts, so I only rounded up to the nearest $25 mark each month. Now that all our other bills are paid off and we are investing in Roth IRAs and a 401k, I'm paying an extra $250 every month (just started that this month). Going to try that for a few months and see how it goes. After that, I'll review and see if I can increase, or need to stay at $250. (My PI payment is only about $630). After that, I'll apply all bonuses, raises and tax refunds toward paying down the balance.

Could I get a higher return by investing more? Yes, I'm sure I could do better than my 5.75% interest rate. But we are already maxxing 2 Roths and taking full advantage of company match on the 401k, and I want the house payment to go away.
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Old 03-19-2010, 10:53 AM
 
Location: NJ
17,579 posts, read 29,368,107 times
Reputation: 15743
Somewhat on the same topic, does anyone pay their mortgage semi-monthly?
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Old 03-19-2010, 11:34 AM
 
3,648 posts, read 9,333,036 times
Reputation: 1735
Quote:
Originally Posted by manderly6 View Post
Somewhat on the same topic, does anyone pay their mortgage semi-monthly?
Don't see the point as you can do it on your own for free making just one payment a month. Bi-monthly equals 13 payments/yr. instead of 12. You can take your principal and interest payment divided by 12 and add that much additional to your payment every month and accomplish the same thing.
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