Chewy Posted August 23, 2012 Share Posted August 23, 2012 (edited) Mortgage... So I decided I'd start paying an extra one or two mortgage payments a year because I'd been told that it can really save you a ton of money over the long haul. Well, being one that likes to "see it to believe it" I set out to do so... I found this neat calculator to help you decide what to do. It costs me an extra 144 to 288 bucks per month to do this and here are the results. I took my monthly payment which includes escrow so my figures are a little skewed. Not bad IMO... I will pay as much as I can afford... We'll see after the 2nd child comes into play, but I think we can wing it. Scrimp and save... Here's the calculator, try it out for yourself: Additional Payment Calculator Edited August 23, 2012 by Chewy Link to comment Share on other sites More sharing options...
Kody Posted August 23, 2012 Share Posted August 23, 2012 That's pretty cool! Just for fun I did it with my car, the results... Actually kinda surprising! It was a pretty good chunk of change. Thanks Kody Link to comment Share on other sites More sharing options...
Team Adam's Posted August 23, 2012 Share Posted August 23, 2012 Just need to make sure that the loan you're paying on doesn't have a pre-payment penalty... not a common issue, but there are loans out there that write that in specifically to help ensure the bank/lender gets 100% of the interest they originally calculated. But definitely a good idea to throw an extra payment in when you can to get it paid down faster. Link to comment Share on other sites More sharing options...
Chewy Posted August 23, 2012 Author Share Posted August 23, 2012 AGREED! Mine does NOT have that issue... Link to comment Share on other sites More sharing options...
Diggerdan11 Posted August 23, 2012 Share Posted August 23, 2012 Its amazing how much you can save if you pay a house of early. When I buy my next house I plan on making extra payments just for this reason Link to comment Share on other sites More sharing options...
Marylander Posted August 23, 2012 Share Posted August 23, 2012 It's worth considering, though, if you can afford an extra $250 or whatever a month to invest it rather than pay off your mortgage. As much as it's psychologically nice to get rid of debt as fast as you can, money is cheap these days. Even investing conservatively you might get 4-5% long term and do better -- and the big thing is of course that you keep the money rather than give it to the bank. When the mortgage is paid off your big chunk of change keeps growing for you. Link to comment Share on other sites More sharing options...
Team Adam's Posted August 23, 2012 Share Posted August 23, 2012 True, but that depends largely on the APR/APY of your mortgage too... right now with rates hovering in the 3.75-4.25 range for most it works, but back when we bought our last place the rate we got was 5.125 which was hard to outpace for sure with any investment. Link to comment Share on other sites More sharing options...
Feets31 Posted August 23, 2012 Share Posted August 23, 2012 And make the extra payment for principle or they will put it toward interest. Link to comment Share on other sites More sharing options...
Chewy Posted August 23, 2012 Author Share Posted August 23, 2012 I got lucky and my mortgage was sold to US Bank which is the bank I use for ALL my banking needs. They have little boxes where you can add additional escrow and principal to you payments. It also pulls it from the account immediately. Also remember peeps, if your payment is DUE on the first, but not considered late until the 16th, you're actually hurting you financially to pay it after the 1st. Always pay on or before the date. Chris Link to comment Share on other sites More sharing options...
Chewy Posted August 23, 2012 Author Share Posted August 23, 2012 It's worth considering, though, if you can afford an extra $250 or whatever a month to invest it rather than pay off your mortgage. As much as it's psychologically nice to get rid of debt as fast as you can, money is cheap these days. Even investing conservatively you might get 4-5% long term and do better -- and the big thing is of course that you keep the money rather than give it to the bank. When the mortgage is paid off your big chunk of change keeps growing for you. I won't disagree with that Rich... I do currently have 7% of my income going into our 401K. I will increase that as I go forward, but for now where we are financially, that's where I feel comfy. Link to comment Share on other sites More sharing options...
Marylander Posted August 23, 2012 Share Posted August 23, 2012 True, but that depends largely on the APR/APY of your mortgage too... right now with rates hovering in the 3.75-4.25 range for most it works, but back when we bought our last place the rate we got was 5.125 which was hard to outpace for sure with any investment. Very true... we're at 3.25% on a 15 year mortgage, so it makes little sense to pre-pay it. Link to comment Share on other sites More sharing options...
Tim Posted August 23, 2012 Share Posted August 23, 2012 It's worth considering, though, if you can afford an extra $250 or whatever a month to invest it rather than pay off your mortgage. As much as it's psychologically nice to get rid of debt as fast as you can, money is cheap these days. Even investing conservatively you might get 4-5% long term and do better -- and the big thing is of course that you keep the money rather than give it to the bank. When the mortgage is paid off your big chunk of change keeps growing for you. This is a good idea Rich. Don't forget, the interest you pay on your primary residence (possibly second - consult your tax professional) is tax deductible. Link to comment Share on other sites More sharing options...
Marylander Posted August 23, 2012 Share Posted August 23, 2012 This is a good idea Rich. Don't forget, the interest you pay on your primary residence (possibly second - consult your tax professional) is tax deductible. Exactly. You get savings both ways. Link to comment Share on other sites More sharing options...
Chewy Posted August 23, 2012 Author Share Posted August 23, 2012 Very true... we're at 3.25% on a 15 year mortgage, so it makes little sense to pre-pay it. Well the calculator allows you to put your interest rate in and you see the numbers you're saving. I am at 3.875%. Chris Link to comment Share on other sites More sharing options...
Tim Posted August 23, 2012 Share Posted August 23, 2012 You also want to check if your mortgage company will charge you for processing the extra payments. Link to comment Share on other sites More sharing options...
MAYBEN Posted August 27, 2012 Share Posted August 27, 2012 cool calculator.. we just streamline re-fi'd for 3.5, from 5.25 (April 2010). Some of the details to close seemed odd, however worked out for the long run.. one thing that does suck about it, the MIP of the loan went from 150 a month to 325, that sucks, but still saving money overall.. Link to comment Share on other sites More sharing options...
Chris@Adams Posted August 27, 2012 Share Posted August 27, 2012 If you pay half of your payment every 2 weeks it save you money too in the long run. Link to comment Share on other sites More sharing options...
Z71_Denali Posted August 27, 2012 Share Posted August 27, 2012 sweet! we're already paying an extra $500 a month on ours, and that calculator shows we'll save $93,000 in interest and 11 years of payments!!! Link to comment Share on other sites More sharing options...
Z71_Denali Posted August 27, 2012 Share Posted August 27, 2012 If you pay half of your payment every 2 weeks it save you money too in the long run. our bank, (broker sold it to US Bank) has a payment accelerator where they bill you twice a month, but you have to pay upfront fees for it. kinda pointless, because it will take time to actually pay back the fees. Link to comment Share on other sites More sharing options...
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