Tips for mortgage payment

. Phone Post 3.0

Many mortgages have a clause only allowing you to pay off an extra certain amount each year.

I pay a lot more every month and it seems to make no difference.
I know it does but it doesn't seem that way.
So much of the fucker is taxes. Phone Post 3.0

SallymeetsHarrySack - I believe if you make one extra payment a year you will reduce a 30 year mortgage to 23 years.

Depends on the interest rate and when in the amortization schedule you start making the extra payments. Phone Post 3.0

In Phone Post 3.0

Funny thing is after you are retired, kids out of the house, you actually want to have a mortgage, preferably for as long as you live. There's no benefit to paying it off early, -if- you have a fixed income (vested retirement) and if the loan is a fixed interest.

I was thinking about making my 30 year a 15 with refi, but it just means I pay more per month. If I don't live for 30 years, my beneficiary gets less.

FWIW

WidespreadPanic -


Funny thing is after you are retired, kids out of the house, you actually want to have a mortgage, preferably for as long as you live. There's no benefit to paying it off early, -if- you have a fixed income (vested retirement) and if the loan is a fixed interest.



I was thinking about making my 30 year a 15 with refi, but it just means I pay more per month. If I don't live for 30 years, my beneficiary gets less.



FWIW

I've heard this but why? Phone Post 3.0

Later. Phone Post 3.0

TFK_likatiga -
GaspareBJJ -
Hoyce Chopino - Do biweekly payments, it will cut at least 10 years off. Phone Post 3.0
So pretty much pay double every month? Phone Post 3.0
No, pay 1/2 the monthly payment every two weeks. It's essentially an additional payment a year.

Mortgage = $3000 / month

$3,000 X 12 months = $36,000

$1,500 X 26 weeks = $39,000

except a lot of lenders don't accept partial payments. Phone Post 3.0

My first mortgage was an FHA (I didn't have to put 20% down, we put 10% down). I always paid more than the minimum, some months more than others, but always more.

About 3.5 years ago I refi'd to a better rate, which lowered the minimum note, but I kept paying as I was before. Paid enough down on the principal that I was able to drop the mortgage insurance, which took another chunk off the minimum payment, and I still keep paying the same.

The wife and I also are both earning more now, and at this point I am paying about 35% over my minimum required payment (which all goes towards principal). I don't know how many years this will shed, but I am making good progress at dropping the principal. Phone Post 3.0

WidespreadPanic - 


Funny thing is after you are retired, kids out of the house, you actually want to have a mortgage, preferably for as long as you live. There's no benefit to paying it off early, -if- you have a fixed income (vested retirement) and if the loan is a fixed interest.



I was thinking about making my 30 year a 15 with refi, but it just means I pay more per month. If I don't live for 30 years, my beneficiary gets less.



FWIW


Yeah but what if you pay it off and buy another house while you're still working?

WidespreadPanic -


Funny thing is after you are retired, kids out of the house, you actually want to have a mortgage, preferably for as long as you live. There's no benefit to paying it off early, -if- you have a fixed income (vested retirement) and if the loan is a fixed interest.



I was thinking about making my 30 year a 15 with refi, but it just means I pay more per month. If I don't live for 30 years, my beneficiary gets less.



FWIW

How's that? They (beneficiaries) would sell the house and take the equity. Its all the same once you're dead.

Not having a house payment makes tons of sense from a cash flow perspective, but not always from a P n L perspective - your rate of return on a paid off mortgage is fixed at the appreciation rate of the property. Unless you're in a hot market/ pocket, you're probably better off investing elsewhere. The reason real estate usually kicks so much ass as an investment is because it's usually highly leveraged - you get all the appreciation on the value of the property for just a fraction of it ie. just your down payment. Think of a 100k house that you put 20k down on. If it increases in value 10% or 10k, that's a 50% return on youre down payment.

Also, sometimes it can be helpful having a big bank involved as a co-owner when it's you vs an insurance company.

Ultimately though, it's a philosophical argument. Cash flow is often more important to people in retirement. P n L is a priority when your building wealth. Where do you fit on that spectrum. One strategy you can always take is to mortgage 50% of your paid off home's value in an interest only mortgage. You essentially own half and rent the other half from the bank and have 50% in cash to invest and likely earn more than the interest on the mortgage. Phone Post 3.0

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