House Payment

[Cole]

If you pay an extra $100 a month toward the principal of your house payment does it make a substantial differance over time? Whats the easiest way to pay your house off early? Just trying to figure out ways to maybe pay my house off early and not go broke.

 

[bigsilly]

Making one extra payment a year will cut about 5 or 6 years off normally. Depending on the length and terms of your loan it can be better to pay extra per month instead of one payment extra at the end of the year. The best thing to do is pull up an amortization calculator and use your mortgage amount and interest rate and play with paying extra per month versus one payment a year and see what it tells you.

 

[muchado]

The difference between a 15 and 30 year note is not very significant! Outta check that out... I was suprised it's only aprox. 300 bux more a month to cut my mortgage payment terms in half. Of course I haven't acted on it, I need to stop spending $$ on toys.

 

[Cole]

Making one extra payment a year will cut about 5 or 6 years off normally.

This is what I had heard but didn't know if it was true. So if I made 2 extra payments a year would that knock 10-12 years off. Just curious, because sometimes I may have extra money I could use toward this, but not always.

The difference between a 15 and 30 year note is not very significant! Outta check that out... I was suprised it's only aprox. 300 bux more a month to cut my mortgage payment terms in half. Of course I haven't acted on it, I need to stop spending $$ on toys.

Yeah I checked into it when I bought my house, but I am like you and I like my toys and being able to go and have a good time.

 

[J.A.B]

Use this calculator

http://www.bankrate.com/calculators/mortgages/loan-calculator.aspx

 

[John Galbreath Jr.]

Yes, anything you put toward will help a lot in the long run. Your mortgage company can run payoffs for you at different payment levels.

I found this with a quick search:

http://www.bretwhissel.net/cgi-bin/amortize

Plug in your information, leave baloon and payment amount blank. It will calculate your payment. Then up your payment $100.00 and delete the "Number of regular payments" box, it will give you the number of months you will cut off. Call me if you need help with it. Here is an example:

$200K loan at 6% for 30 years (360 months) is $1199.10 per month. Change the payment up $100 to $1,299.10 and the months drops to 294. Dropping 5 1/2 years off your mortgage.

This is how I paid off my 15 year in 10 1/2 years. Paid off that bitch in December last year.

 

[bigsilly]

This is what I had heard but didn't know if it was true. So if I made 2 extra payments a year would that knock 10-12 years off. Just curious, because sometimes I may have extra money I could use toward this, but not always.

Making double the payment each year will not always take off double the time. I like the calculator below from bankrate.com

But as John said, any amount you pay extra helps in the long run and builds equity fast. You are dealing with A LOT of interest right now and the quicker you can knock it down on the front end the more it will save you on the back end.

http://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx

 

[Cole]

Thanks guys

 

[jkh533]

Just make sure your lender will let you apply it toward the principle, some lenders apply it towards payments amd it doesn't knock your interest down you just pay the smae amount faster.
Ask me how I know about some not letting you do it.
You can do the calcs on excel real easy also.

 

[Cole]

Just make sure your lender will let you apply it toward the principle, some lenders apply it towards payments amd it doesn't knock your interest down you just pay the smae amount faster.
Ask me how I know about some not letting you do it.
You can do the calcs on excel real easy also.

I pay it online, and it has a seperate spot for additional money toward the Principal.

 

[kmcminn]

The person I deal with at the bank showed a piece of paper that said if I make one extra payment a year it will pay off in 22 years instead of 30.

 

[BamaTJ]

I guess there are two schools of thought on that. One is to make an extra payment, but the crappy thing about that is you are never going to lower your monthly payment even with making extra principle payments. I subscribe to the theory of just saving as much as you can in cash so you can make a lump sum payoff of your mtg. Plus you have a large nest egg of cash just in case something ever goes south. By paying in extra money to your mtg you get more equity but these days that is not worth near as much as cash because to unlock your equity your house must appraise for the value to do a refinance/home equity loan, or you have to sell it. Both of those things are hard to do in this shitty housing market.

 

[blacksheep10]

I guess there are two schools of thought on that. One is to make an extra payment, but the crappy thing about that is you are never going to lower your monthly payment even with making extra principle payments. I subscribe to the theory of just saving as much as you can in cash so you can make a lump sum payoff of your mtg. Plus you have a large nest egg of cash just in case something ever goes south. By paying in extra money to your mtg you get more equity but these days that is not worth near as much as cash because to unlock your equity your house must appraise for the value to do a refinance/home equity loan, or you have to sell it. Both of those things are hard to do in this shitty housing market.

I have a hard time saving that much cash earning 1/2% while your note is costing you 5%. If you have an oops moment, put it on your HELOC because you'll have enough equity with the extra principle paid off to have a line at that point. I never sit on the money unless I'm borrowing at 0%. Pay that **** off, cash in hand doesn't earn **** and legally earned and reported funds are profit taxed to death. If you can turn cash in hand into more cash in hand on buying and selling, great, but think about future money as well.

Cole, right now you are paying almost all interest. throwing an extra hundy on there is the best thing to do. Going to a 15 year backs you into a corner. you HAVE to make that payment. Than again, you HAVE to make that payment laughing1

 

[InDaShop]

Couldnt have picked a better time to be picking up a Mortgage though, and rates will have really dropped by mid-end of summer. I think we are forecasting 30years at 4.25-4.375

I'm with Kelly, hard to save during the year and then may a lump additional payment. I couldnt even tell you what my mortgage is really is, but I can tell ya how much I pay a month and it was a round number I knew I could make. Good luck man!

 

[Toddy]

Best thing you can do is set an amount and have it taken out of your account and never look back. If its just 50 a month it still helps. Just make it where you don't look at it and it just pays its self. I did this when I refinanced. Went from 6.25 to 4.75 and never touched what I pay. Now I am paying like 150 extra but I was used to making that payment. Can't give myself the option to not pay the extra or it will be spent on other stupid ****.

Toddy

 

[jkh533]

Best way I found to not worry about saving it is to set aside half of my payment every other week, you will wind up sending 13 months of payments in at the end of the year.

 

[HotwheelsYJ]

I figured this up when I bought my house 11years ago. I pay an extra $100 every month plus When I get my income tax back I drop $1000 on the principal.
I'll have my 30 yr note paid off in about 15 yrs. It also save me from paying just over $33000 in interest

4 more years & this ****ers mine! Too bad I'm selling next spring.

 

[CHASMAN9]

Creative financing 101; Open a home equity loan against your house, and use some of that money to pay against principal and then write your equity line payments off as home improvements and now you have a tax break.

 

[InDaShop]

Creative financing 101; Open a home equity loan against your house, and use some of that money to pay against principal and then write your equity line payments off as home improvements and now you have a tax break.

Already can see we get along well.
This works but you have to be in the situation the IR's arent low enough that it makes sense for a ReFi your 1st Mortgage. You are really just time frame shifting your 1st Mortgage into a shorter term and currently lower IR.

 

[CHASMAN9]

Already can see we get along well.
This works but you have to be in the situation the IR's arent low enough that it makes sense for a ReFi your 1st Mortgage. You are really just time frame shifting your 1st Mortgage into a shorter term and currently lower IR.

Dat's right... If you borrow let's say $10,000 against your equity line, and use $5000.00 for improvements and then pay the other $5000.00 against your mortgage, you can spread out the payments over many months and if you put it into a short term investment account, you can make 2-3% on it and still write off the whole $10,000.00 as home improvements.