How many of you make extra mortgage payments or do 15-year mortgages instead of 30-year? (tenant, 3%)
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I heard if you pay an extra payment a month every year, you reduce the length of your mortgage by like 6 years? So a 30-year would become like 24 years?
I guess I should play around with a amortization schedule/calculator to see how many payments I'd need to make to pay off a 30-year mortgage in 15 years.
I just took a 30 year mortgage in March. If I pay double per month, my mortgage would be paid off in August 2024 instead of May 2047. I think what you meant to say is an extra payment per YEAR. With an extra per year, it would be April 2040. So it would take off 7 years.
If I make 130% of my payment each month, my last payment would be June 2032, which would be one month past the 15 year mark.
Paying down the principal makes a bigger difference at the beginning of the loan. Since mine is so new, and my mortgage company has an easily adjustable amoritization calculator, I figured I could supply rough numbers. When I calculated paying extra, that was my full PITI payment, not just the principal and interest.
Right now, I have only been rounding up to the nearest 100 and in just the three payments I've made, I have knocked a month off. Once my savings is caught back up to my desired level, I will start throwing an extra $1000-2000 at it per month. My goal is to pay it off in under 10 years.
Wow, I start to wonder about what real estate will be like in the year 2525.
A sci-fi author Philip K. Dick predicted by then that we would all be living in "conapts" as follows:
Quote:
In SF Terminology, an apartment in a high-rise building. Conapts often feature what is effectively a complete life-support system, so that even when they are in a densely populated city their inhabitants are often seen to be isolated from other people. A conapt is often assumed to be in a city consisting of high-rise buildings, each one highly populated, but with the buildings themselves not necessarily crowded together, and sometimes separated by parkland. Probably formed as a contraction of condominium apartment, the term was coined by Philip K Dick, who used it in many of his novels, and was taken up by other sf writers. It is a typical piece of sf shorthand.
Meanwhile I'm happy to be working on my first fantasy novel, and I do not intend to take up P. K. Dick's concept of "conapts." It's too dystopic for me. However I respect that he was one of the SciFi greats.
How many of you make extra mortgage payments or do 15-year mortgages instead of 30-year?
We did.
We had a 30 year at 4.5%. We paid an extra $1000 a month to it. 2010
Then refinanced when rates got sick low (2.75%) to a 15 year. 2012
Then paid it off. 2015
I did the same thing 20 years ago when my student loans were consolidated. I got a paper that said 30 years. I said, "Hell, no." Sent it back. Demanded the make it 10 year.
Yeah, we've always been the folks making our fun at home while other people go out all the time or go shopping for fancy crap, but debt-free with a net worth in the seven figures before 40 years is unusual and awesome, even in my line of work.
My student loans are the only debt I've never paid over on. My interest rate is only 2.125%. You can't get a loan of any type for that, so it has always been last priority. I have it on a gratuated plan, so it goes up every two years, but I only pay the minimum. I'm down to $15K. If I have my house and everything else paid off, then I will attack the student loan. Until then, I'll continue to let it decrease slowly.
My student loans are the only debt I've never paid over on. My interest rate is only 2.125%. You can't get a loan of any type for that, so it has always been last priority. I have it on a gratuated plan, so it goes up every two years, but I only pay the minimum. I'm down to $15K. If I have my house and everything else paid off, then I will attack the student loan. Until then, I'll continue to let it decrease slowly.
My auto loan was 0.9%. So I'm planning to use a chunk of money (about $3K) to pay off a good portion of remaining student loans first. $2K or so at 5.5% has to get paid off first, then the rest of my student loans are like 2.2%, so I will pay off a portion of that with the rest (about $1k). The car loan at 0.9% is last priority.
How many of you make extra mortgage payments or do 15-year mortgages instead of 30-year?
We did.
We had a 30 year at 4.5%. We paid an extra $1000 a month to it. 2010
Then refinanced when rates got sick low (2.75%) to a 15 year. 2012
Then paid it off. 2015
I did the same thing 20 years ago when my student loans were consolidated. I got a paper that said 30 years. I said, "Hell, no." Sent it back. Demanded the make it 10 year.
Yeah, we've always been the folks making our fun at home while other people go out all the time or go shopping for fancy crap, but debt-free with a net worth in the seven figures before 40 years is unusual and awesome, even in my line of work.
That _is_ awesome. For me, I have a condo I got at a good price and has seen about $70K appreciation over the past 16 months. It's been nice and quiet, convenient, and the monthly cost (including principal, interest, HOA, property tax (divided by 12), and insurance is still about $200-250 cheaper than a comparable sized and equipped apartment in the immediate area. The only inconvenience is that aside from garage, everything else is upstairs. While not an issue for us on most days, eventually a elder family member may want/need a bedroom/bath and laundry on ground floor. And we could use an extra room for guests or another relative who may live with us. Could also use a modest yard for the pets to play in. These are nice to haves instead of absolute necessities, at least at this time.
For the larger sized house with yard that we'd want, it would cost an additional $968 per month (about $200 more in property taxes per month and $7xx more in principal and interest, less $30 or so in HOA).
That's a significant increase in total monthly cost. You could argue that tucking away that money would be like a forced savings, and we could pull it out when it comes time to retire and downsize, likely mostly tax free if I am married status at that time (up to $500K would be tax free for married status). But that money could also go towards paying off the condo loan sooner, then maybe one day renting it out.
Still debating what would be the most financially best path and most beneficial overall. I _do_ know that moving up to a bigger house with yard would mean finances would be tighter, more stress about whether I will be able to pay off the mortgage by retirement or if I'll have to push back retirement by X years.
I bought a home at 50 & took out a 15 yr mortgage with the plan it would be finished at retirement time, I actually got a buyout offer at 63 & there was little enough left debt on the mortgage that I just paid it off in full a few months later. I am totally debt free now. Free as a bird baby!
I have also always rounded UP the payment I do make when extra is not added.
We are 54 and 58, our first home, both individually and separately. Before this we owned a mobile home.
I DON'T like owing on a long term loan.
I pay off cars early {if financed}, too.
We Have made improvements to the house and want to do more. But will wait as we have other goals.
It's always a question: do you invest the extra for retirement or pay off the home? I figure it this way: if steady amounts are paid into retirement, then sure, go ahead and pay extra towards the house. I'd rather have a housing cost {taxes only} that is low {less than half, as we are high tax state} and less in over all retirement, than to struggle to make the mortgage payment in retirement. My income{s} will be finite in retirement, they are varied higher and have room to grow now during working years...
It is up to the individual: if they feel more secure paying it off, then do so.
If they feel they'd want to invest more now, then do so.
There have been MANY MANY TV news reports of people who are in danger of, or have lost homes in retirement, or needing a bail-out when they can't afford the payment on the fixed income as other costs go up. Heck, some can't even afford the taxes only on an expensive house they bought while working, or that was handed down WITH a mortgage left when parents died.
There is "always comfort" in knowing your housing payment is low.
My first mortgage, in 1992, was a 30 year. I refinanced to another 30 year in January 1994 because of a major rate drop in the market, to the original mortgage balance. In August 2003 I refinanced again to a 15 year, again due to a major rate drop, this time at the balance then due on the mortgage. In November 2012 I took advantage of the HARP program and refinanced to a 10 year, again this time at the balance then due on the mortgage, which by now was quite low. I made payments of about $1800 rather than the coupon of just over $1000 until I lost my job at the end of 2014, then dropped back to the coupon. This has served me well since I will finish about two and a half years after the 15 year mortgage in 2003 would have finished, and saved a lot of money in the process.
My only quibble is that the HARP program really should not have been to benefit me, an attorney who is not struggling financially.
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