paying extra on mortgage

Austin Carpenter · Mar 15, 2014

Started really putting what money that I can afford every month. I want this thing gone!!!!! Any of you guys knock yours out fast?

Mike Fitz · Mar 15, 2014

If you think you can consistantly swing the payment, you might consider talking to your lender about a shorter term morgtage and get a lower intrest rate. and save more money yet.

dpendzic · Mar 15, 2014

Yep--whenever I had a few extra bucks I sent it to the bank with the instructions to apply it to the principle only.
That way your total savings is the interest rate times the amount times the number of years left on your mortgage. Knocked 6 years off my 15 year mortgages.

Dave H (MI) · Mar 15, 2014

Yup! After 3 years I refi'd from 30 to 15 because the rate had dropped so much the payment was the same. Seemed like a blinked twice and they were handing me the deed. No mortgage in the 2000-2010 era saved my business as I had monthly bills that were very low and I was actually able to save enough to start expanding (when real estate toppled) a small farm into something more like the real thing. I didn't need a self help financial guru and I didn't listen to armchair amateur brokers preaching about investments vs interest rates. It was just common sense...get out of debt now and invest the savings later.

Anonymous-0 · Mar 15, 2014

Saved money for 10 years and paid cash when I built my house.

Austin Carpenter · Mar 15, 2014

Ya I already have a 15 yr. At 3.25% I don't think I will find it lower.

dpendzic · Mar 15, 2014

That is a very good rate!

Stephen Newell · Mar 15, 2014

I did it and it saved a bunch of money. Don't know if it made any difference but my accountant told me to send two checks. One was the regular payment and the other was marked "Apply to principal only"

Geo-TH,In · Mar 15, 2014

Decades ago I paid mine off, then to keep mortgage exemption, I took out a free Home equity loan, which I never used, and never paid penny one on interest, but get a break on property taxes.

MarkB_MI · Mar 15, 2014

It takes hefty payments to get ahead on a 15 year mortgage, but do so if you can afford to. Make sure you build up a cash reserve first! You should have at least enough money in the bank to pay all your bills for two months should you lose your job or be unable to work.

Remember, just because you're a couple of months ahead on your payments doesn't mean you get to skip a month if times get tough. The mortgage company expects to get paid every month regardless of how much you have left on the balance.

rrlund · Mar 15, 2014

Kinda,but not exactly. I was in the last year of it. Had the money to pay off the balance and get rid of it,so I did.

davewilley · Mar 15, 2014

Make sure your lender knows you are not making extra monthly payments.Tell them you want that money applied only to the principle.

Paul from MI · Mar 15, 2014

I did it twice, both times we paid off a 15 year mortgage in 7 years. Back then interest rates were 6.5% to 8% so we saved a lot of money, and there's nothing like the feeling when you don't owe anything any more. Didn't live very high on the hog, but we got by just fine. Now the friends who took the big vacations, bought expensive toys, etc. are still slaves to a payment book.

Greg K · Mar 15, 2014

Trying to right now. We bought our house and were paying at 3.75% interest. We refinanced when rates were down to 2.7% but didn't get paperwork through until it was 3%. Went from a 30 year to a 15 year and only pay $100/month more. If we hadn't done that I like to think we would have made an extra payment a year.

Anonymous-0 · Mar 15, 2014

Paid our mortgage off in 1999 15 years mortgage free. Best thing I ever did now I take the money and build wealth. To ---- with borrowing

lloyd in sc · Mar 15, 2014

This is really important as they try to just apply it all to payment making you pay interest in advance. You want any extra to pay down principal only.

It would be best to get this in writing from them & you keep checking those statements...

RedJA · Mar 15, 2014

Yep I done exactly like Stephen sent two checks one marked principle only. Paid 15 year loan off in 12 years.

Ultradog MN · Mar 15, 2014

You can do a search for amortization calculator and get several.
Type in the values - loan amount, interest rate, etc and it will calculate your payment.
The one below allows you to type in an extra monthly or yearly payment and it will tell you how that affects your pay off date.
One advantage to leaving your mortgage as is and just paying extra as you can is it lets you decide how much you want to pay and adjust the overage to unexpected bills, etc.
I always pay extra each month. They say if you make one extra payment per year you will pay off a 30 year note 8 years early.
I try to make the equivalent of 2 or 3 extra payments per year but do it as I can and not because I'm required to.
Calculator

FBH44 · Mar 15, 2014

Yes, got rid of it, then put the same monthly amount into savings / mutuals / etc.
Really paid off. You won't miss it, but you'll see it pile up every month.
You're manking a wise decision.

SweetFeet · Mar 15, 2014

We do like UltraDog... we always pay extra. In fact, when we get our land rent each spring, we make our principal (plus extra principal) and interest payments for the entire upcoming year... which lowers are principal balance BOOM.

We have them put our interest payment for the upcoming year into a Funds-Held account and then they pull the interest when due each month (and our money earns interest while sitting in the Funds-Held account....more than the half percent it would earn in a savings account).

We nearly had our farm paid off once... then we tiled our land. BUT we get higher rent for tiled land AND we should still be able to pay-off the mortgage before we retire...God willin'.

Eldon (WA) · Mar 15, 2014

(quoted from post at 12:41:41 03/15/14) Saved money for 10 years and paid cash when I built my house.

Did the same here....took me 4 years (winters) to do it myself, but it was worth it. Haven't had a mortgage in 10 years. Freed up a lot of money for TRACTORS!

Mike (WA) · Mar 15, 2014

Will turn 66 in August, wife in October, both still working. I'll start drawing SS in August, she'll draw half of mine and leave her account to grow until she actually retires. Its called FASF- File as spouse first- its like money falling from the sky- check it out if both of you work and are nearing retirement age, but at least one of you intends to continue to work on past it.

Extra $2,750 a month will go against the mortgage- should knock that sucker out in pretty short order. Although it may not be worth it- mortgage is at 2.875%, and is only abut $250 a month- the rest is taxes and insurance, which will continue even after mortgage is paid off. But it will still be nice to get it done with.

Anonymous-0 · Mar 15, 2014

bought my place in 1981.15% interest. Paid it off in 11 years.It Was a smart move.Borrowed money to buy another farm & paid it off in 2 years. Hate payments to the bank & paying interest.

farmerwithmutt · Mar 15, 2014

My dad bought farm in 56 low intrest could have payed early but remember the intrest the paid in 70s? Im the same way i pay all high intrest first and then if i can invest at a higher rate i do it otherwise the mortgage gets it

huntingreen2day2 · Mar 15, 2014

I made my monthly payment 1/2 of it the first of the month and the other 1/2 the 2nd half of the month and paid my 15 year note off in 12 years. was not paying any extra just paying it a little quicker.

John T · Mar 15, 2014

Over many years I bought and sold several farms and paid the mortgage off when they were sold, of course. Once you get over 60 no way you should still have a mortgage in my opinion, that's for young people starting out notttttttttt us senior citizens lol. ALLLLLLL our debts, including any mortgages, should have been paid off years ago.

Ol Conservative John T

Bob Bancroft · Mar 15, 2014

We doubled up on our principal payment for the last several years. Made the last payment a year ago, just before I turned 58. (Wife was already 58!) Hah!

Vito · Mar 15, 2014

We knocked ours out fairly quickly by matching the principle amount for that month.Remember mortgages are predominately all interest on the front end,Example would be $ 300 in interest and $ 100 in principle.Pay as much as you can afford without cutting into your reserves which should be at least 6 to 12 months of living money.Pay off all higher interest loans first i.e. credit cards car loans etc. if you have them.

HTH

Vito

Anonymous-0 · Mar 16, 2014

Did on everything. Student loan was for ten years, paid the the whole bill when the first monthly payments started becoming due. House mortgage was 25 years. paid in sixteen. Farm mortgage was 20 years, paid in eleven. First new car had a three year mortgage, paid in 13 months. Didn't have any more car mortgages.

kyhayman · Mar 16, 2014

Yup, only way to live.... I bought the farm in 88, made the last payment in 93, borrowed again in 94 to buy a house in town as I was getting married, made the last payment on it in 07 (we both had a new car habit that stretched that out a bit, and I bought more land in there debt free too), and we split up a month later. Took me a couple of years to get back on my feet after that.... so far and the good lord willing there wont be any more loans that I take out.

Bret4207 · Mar 17, 2014

We make our mortgage payments every 2 weeks instead of once a month. IOW- 26 payments a year on a 15 year mort. You end up paying it off in 12-13 years. Sadly, our escrow for taxes takes up most of one payment!

Pops1532 · Mar 17, 2014

I don't like working for the bank. Every mortgage or car loan we've ever had, we've paid off early.
The easy part is paying extra on a loan and getting out of debt as soon as possible. The hard part is not spending the money that would have gone towards loan payments once the loan is paid off. Invest that money for your retirement.

Bob in WY · Mar 17, 2014

My understanding is that if you pay extra you don't have to mark it towards principle only but the type of loan you have could make a difference.

Any time I have gotten a loan I specified that it be a simple interest loan with no early pay off penalty. This was for mortgage and car loans. Every loan was paid off early with no problems even though I didn't specify the extra be applied against principle only.

It would probably pay to talk to your banker just to be sure you don't have an early payoff penalty on your loan.

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