leroydb 0 #1 April 7, 2007 Well I think I did the calculations correctly but it appears that extra payments are VERY advantageous... I have a normal 30 loan, fixed rate, and have been paying for 3 yrs so far. I can either pay 667 extra a month to my principle and pay off my loan in 7-8 years or I could put 20k on the loan and pay 200 extra a month and still pay it off in 7-8 years... Can a math wiz verify? please PM for specifics...Leroy ..I knew I was an unwanted baby when I saw my bath toys were a toaster and a radio... Quote Share this post Link to post Share on other sites
karenmeal 0 #2 April 7, 2007 2 + 2 = 4 Glad I could help. "Life is a temporary victory over the causes which induce death." - Sylvester Graham Quote Share this post Link to post Share on other sites
leroydb 0 #3 April 7, 2007 I love you!Leroy ..I knew I was an unwanted baby when I saw my bath toys were a toaster and a radio... Quote Share this post Link to post Share on other sites
shropshire 0 #4 April 7, 2007 I cant confirm your maths, but I can confirm that extra mortgage payments have been great for me. I now have a mortgage linked to my savings account (Offset Mortgage), so instead of getting interst on my savings, those monies go as extra payments to my mortgage... the additional benifit of that is that I do not pay tax on the interest from my savings and it shortens the term of my mortgage... win-win (.)Y(.) Chivalry is not dead; it only sleeps for want of work to do. - Jerome K Jerome Quote Share this post Link to post Share on other sites
pincheck 0 #5 April 7, 2007 i only got 6 years left on my mortage which is just a straight repayment. i would really hate to be taking out a new one Just now wit hte spiralling housing costs. Gives my kids time to come up with a plan for bumping me and the wife off Billy-Sonic Haggis Flickr-Fun Quote Share this post Link to post Share on other sites
shropshire 0 #6 April 7, 2007 Check that your reserve hasn't been 'adjusted'!! (.)Y(.) Chivalry is not dead; it only sleeps for want of work to do. - Jerome K Jerome Quote Share this post Link to post Share on other sites
jasonRose 0 #7 April 7, 2007 More info please!! How much was the original loan, interest rate, how long have been making regular payments and how long have you been making extra principle payments?? Some day I will have the best staff in the world!!! Quote Share this post Link to post Share on other sites
eeneR 3 #8 April 7, 2007 Here is a mortgage calculator Plug it all in She is not a "Dumb Blonde" - She is a "Light-Haired Detour Off The Information Superhighway." eeneR TF#72, FB#4130, Incauto Quote Share this post Link to post Share on other sites
JohnMitchell 16 #9 April 7, 2007 2 schools of thought : 1- Put any extra money into the mortgage. I used a separate check marked "payment on principle loan #xxxx". You can track your principle reduction on an amortization schedule and watch the years remaining shrink. 2- Put your extra money into one type of investment or another (stocks, real estate investments, etc.) that will get you a rate of return superior to your mortgage interest rate. Enjoy your income tax deduction of mortgage interest payed, until one day your investment equals the principle left on your loan. Then you sell your investment and pay off the mortgage. We did a combination of the two. 1st method is best, I think, if you have a high rate and a slow economy. 2nd may be best if you have a low rate and some good investments. You will have to deal with the capital gains tax using the 2nd method, though, another thing to consider. Either one is a smart thing to do, though, compared to nothing at all, or worse, getting a 2nd mortgage to buy toys. Quote Share this post Link to post Share on other sites
JohnMitchell 16 #10 April 7, 2007 QuoteI now have a mortgage linked to my savings account (Offset Mortgage), so instead of getting interst on my savings, those monies go as extra payments to my mortgage... the additional benifit of that is that I do not pay tax on the interest from my savings and it shortens the term of my mortgage... win-win I only recently heard of those. What a great idea, but I don't think it has caught on in the Colonies. I know some people who would never get out of debt if their checkbook was linked to their home equity. But I wish I had had that tool back when we had a mortgage. Quote Share this post Link to post Share on other sites shropshire 0 #11 April 7, 2007 I like your #2 better (if you can get a good investment) as our Offset Mortgage does have a slightly higher interst rate.. and possibly not such a good retrune interest on the savings account... but on balance it works (maybe slower than some routes) and it's very easy. (.)Y(.) Chivalry is not dead; it only sleeps for want of work to do. - Jerome K Jerome Quote Share this post Link to post Share on other sites Channman 2 #12 April 7, 2007 Well it appears your on the right track. But I would caution paying $20,000 down on your mortgage with out proper consideration to your over all financial plan. There is an old saying, "the rich get richer and the poor get poorer". Simply the rich understand how to put their money to work for them and maintain ownership. With out going through a long story, once you invest the 20K into your mortgage it becomes wrapped up in a home. If you become ill, disabled, or an emergency comes up you no longer have the cash and my be required to sell or refinance to get the money. Your first plan of paying 667 extra a month would be far wiser. Most 1st mortgages are based on scheduled interest with scheduled payments. Any additional payments you send would still be subject to the schedule set out in your loan documents. Consider making Bi-weekly payments with your P&I payments increase each payment with your excelleration payment of $333.50. every two weeks. Quick example: Work this out by hand so the figures will be close but not exact. 150,000 Loan with payments beginning 4/15/2007 @ 7.00% with a P & I payment of $997.92 for 360 months. P & I payments 360 months = $359,243 - 150,000 equals $209,243 in interest. If you payed Bi-weekly + your 333.50 Bi-weekly excelleration you would have the loan payed off in 9 years and 2 months saving $153,747 dollars in interest payments. Invest the $20,000 in a good diversified stock mutual fund and average 12% which I assure there are many funds that have performed as well or better. Also for the sake of my numbers there will be no annual taxes on the investment you could accumulated $64,707.12. Payed off mortgage and cash in the bank. Quote Share this post Link to post Share on other sites Join the conversation You can post now and register later. If you have an account, sign in now to post with your account. Note: Your post will require moderator approval before it will be visible. Reply to this topic... × Pasted as rich text. Paste as plain text instead Only 75 emoji are allowed. × Your link has been automatically embedded. Display as a link instead × Your previous content has been restored. Clear editor × You cannot paste images directly. Upload or insert images from URL. Insert image from URL × Desktop Tablet Phone Submit Reply 0
shropshire 0 #11 April 7, 2007 I like your #2 better (if you can get a good investment) as our Offset Mortgage does have a slightly higher interst rate.. and possibly not such a good retrune interest on the savings account... but on balance it works (maybe slower than some routes) and it's very easy. (.)Y(.) Chivalry is not dead; it only sleeps for want of work to do. - Jerome K Jerome Quote Share this post Link to post Share on other sites
Channman 2 #12 April 7, 2007 Well it appears your on the right track. But I would caution paying $20,000 down on your mortgage with out proper consideration to your over all financial plan. There is an old saying, "the rich get richer and the poor get poorer". Simply the rich understand how to put their money to work for them and maintain ownership. With out going through a long story, once you invest the 20K into your mortgage it becomes wrapped up in a home. If you become ill, disabled, or an emergency comes up you no longer have the cash and my be required to sell or refinance to get the money. Your first plan of paying 667 extra a month would be far wiser. Most 1st mortgages are based on scheduled interest with scheduled payments. Any additional payments you send would still be subject to the schedule set out in your loan documents. Consider making Bi-weekly payments with your P&I payments increase each payment with your excelleration payment of $333.50. every two weeks. Quick example: Work this out by hand so the figures will be close but not exact. 150,000 Loan with payments beginning 4/15/2007 @ 7.00% with a P & I payment of $997.92 for 360 months. P & I payments 360 months = $359,243 - 150,000 equals $209,243 in interest. If you payed Bi-weekly + your 333.50 Bi-weekly excelleration you would have the loan payed off in 9 years and 2 months saving $153,747 dollars in interest payments. Invest the $20,000 in a good diversified stock mutual fund and average 12% which I assure there are many funds that have performed as well or better. Also for the sake of my numbers there will be no annual taxes on the investment you could accumulated $64,707.12. Payed off mortgage and cash in the bank. Quote Share this post Link to post Share on other sites
