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| paula0000 |
 Posted: Sun Mar 20, 2005 2:21 pm Post subject: When do you hope to have your mortgage paid off? |
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Investing Manager
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| Just wondering...When we bought, the standard was a 25 year repayment- then with extra payments and paying bi-weekly, we'll have it paid off in 15- but how long for you guys? |
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| foxnstocks |
| Posted: Mon Mar 21, 2005 4:59 am Post subject: |
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Investing Sr. Associate
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| When we bought, we had a 30 year loan. Four years later, we refinanced to a 20 year loan for almost the same monthly payment, knocking off 6 years right there. We send extra principal each month so that our 20 years should knock down to about 18 (or less). |
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| Dave Rathbun |
| Posted: Mon Apr 11, 2005 4:43 am Post subject: |
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CFO
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I've already paid off one house, it was a nice feeling.  We had purchased the house (a starter house) intending to live in it for five years while we saved for a down payment for a larger house. Eight years later we're still in the house, and have enough saved to pay off the house we were in. So we did. Then we saved a lot over the next two years, as we had no house payment, no car payment, no debt at all. I highly recommend it.
And before someone says we should have invested the money rather than pay off the house... paying off the house is an investment, and one with a known, quantified return. Our loan at the time was 8%. At the time we did not have enough deductions to use the interest on the house to itemize, so we got no tax benefit whatsoever from paying interest. So, hmm, pay someone else 8% on a loan? Or put our own money into a savings account for the next house... it's an easy decision. My want-to-be-financial planner could not understand that. I told him he needed to provide a guaranteed 12% return before I would consider not paying off the house, and he just didn't see the math.
He's no longer my want-to-be-financial planner either. |
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| Benjamin |
| Posted: Mon Apr 11, 2005 5:15 am Post subject: |
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Administrator
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Well put Dave on paying off your home! Your saving the interest on it and then any increase is value on the home is all yours!
Homes, (especially the one you live in) are a great investment! |
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| chop456 |
| Posted: Fri May 06, 2005 3:27 pm Post subject: |
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Investing Sr. Associate
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| Started with a 30-year 10 years ago. Refinanced to a 15 about 5 years ago and 2 years ago refinanced to a 10-year. The house will be paid off in 8 years. There seems to be a light at the end of the tunnel. |
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| MrInvestor |
| Posted: Fri May 06, 2005 3:41 pm Post subject: |
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Investing Manager
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Just got married and bought a house. We are trying to throw at least $100 extra on each payment as we go.
Does it really help to refinance though? I know in the beginning your paying mostly interest so each time you refinance aren't you pretty much starting over on the interest?  |
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| Dave Rathbun |
| Posted: Fri May 06, 2005 5:44 pm Post subject: |
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CFO
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| MrInvestor wrote: | | Just got married and bought a house. |
Congratulations! 
| Quote: | | We are trying to throw at least $100 extra on each payment as we go. |
Just make sure that it's going to principal.  You have to read the fine print to make sure, or you could probably check your statements.
| Quote: | | Does it really help to refinance though? I know in the beginning your paying mostly interest so each time you refinance aren't you pretty much starting over on the interest? |
The generaly rule of thumb is that if you can lower your interest rate by 2% and are staying in the house longer than two years then you recover the "points" or other closing costs on your refinanced loan by having lower payments. Or even better, continue making the larger payments that you're used to and have the extra go to principal.
We're seem to be more likely to be in an increasing rate scenario for a while now, though, to refinancing is probably not going to be quite as attractive as it was for a while.
Side note for anyone just starting out... many companies pay every other week instead of twice a month or monthly. If you take your house payment (say $800) and pay half the amount out of every paycheck ($400) then you pay off a 30 year loan in (I think) 22 years, saving a full 8 years of payments simply by making payments every other week. This works for two reasons... one is you actually make the equivalent of 13 annual payments (26 paychecks = 13 full payments every year) and the extra payment gets in before more interest has accrued, resulting in a higher principal payment. Again, read the fine print... make sure that the payment is credited on the day it's received and not the day it is due. |
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| lostsoul01 |
| Posted: Tue Jun 07, 2005 8:52 am Post subject: |
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Investing Sr. Associate
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Here's an interesting article which gives reasons not to pay off your mortgage faster. I'm not saying this is good or bad, just another perspective...
Never own your home outright |
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| Dave Rathbun |
| Posted: Tue Jun 07, 2005 11:01 am Post subject: |
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CFO
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| lostsoul01 wrote: | Here's an interesting article which gives reasons not to pay off your mortgage faster. I'm not saying this is good or bad, just another perspective...
Never own your home outright |
I think the article has some major flaws in it. I covered most of my objectings to his ideas in this post in another topic on this board. Suffice it to say that if you do the math you must earn (in my opinion) 5% more than you are paying in interest on your mortgage just to break even. In his article he discusses having a mortgage at 6% and savings at 8%... that doesn't even come close.
Plus, you should never use all of your savings for a down payment, leaving yourself with no options as "Pat" did in the scenarios mentioned in that article.
I'm not trying to say "I'm right - he's wrong" (okay, maybe I am a little) but you can do the math and prove to yourself that it just doesn't work the way it's listed. |
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