Double checking mortgage lender

April 20, 2021, 04:54 AM

thanks guys. I have the statements and think I will go through them. I have requested and they have applied the extra payments to the principle, so that's good.

Now to make sure they correctly calculate the interest based on a smaller principle for a shorter period of time, since most of the early payments where interest payments based on a 30 year loan.

I appreciate your input

April 20, 2021, 06:17 AM

41

quote:
Originally posted by BlackTalonJHP:
It is easily done in Excel. Feel free to email me if you want.

That is what I used and I came out within two cents when paid off in full after eleven years.

April 20, 2021, 11:03 AM

muzzleloader

I did most my payments online after the first few years and there was simply a box to fill in any extra principal payments. Try to make a middle of the cycle principle payment only and that’s impossible for my fifty plus slower brain. I don’t often recommend paying a mortgage off early, but for me was a safety move in case my employer earlied me.

April 20, 2021, 01:28 PM

RogueJSK

quote:
Originally posted by muzzleloader:
I don’t often recommend paying a mortgage off early

Could you expand on that line of thinking?

Because I disagree. To me, debt is debt, and not something to hang onto any longer than you have to. Sure, mortgage debt is technically better than just about any other kind of debt, and other debt should be knocked out first. But once you're cleared out the rest of your debt, and are properly following a detailed budget that includes sufficient emergency savings and retirement contributions, might as well throw whatever extra you've got left at knocking out that last remaining piece of (mortgage) debt ASAP.

This will knock a serious chunk of total interest paid off the life of your mortgage, saving you tens (or even hundreds) of thousands of dollars overall. Plus once you've paid it off early and no longer have that monthly house payment that you have to factor into your budget, you have much greater financial security (for when shit happens) and freedom (to put that money towards whatever else you want), from that point onward.

I'm currently making 2 full extra monthly payments towards principal every year. And as my income continues to rise, that additional income gets rolled into the extra mortgage payments as well. I plan to have my mortgage paid off about 30% faster (if not even sooner, depending on potential future pay raises). And I stand to save about $25k in interest that I won't have to pay... And that's with a super low mortgage interest rate; the savings on unpaid interest for an even higher interest rate would be even more dramatic.

April 20, 2021, 09:34 PM

Nev

quote:
Originally posted by RogueJSK:
quote:
Originally posted by muzzleloader:
I don’t often recommend paying a mortgage off early

Could you expand on that line of thinking?

Because I disagree. To me, debt is debt, and not something to hang onto any longer than you have to. Sure, mortgage debt is technically better than just about any other kind of debt, and other debt should be knocked out first. But once you're cleared out the rest of your debt, and are properly following a detailed budget that includes sufficient emergency savings and retirement contributions, might as well throw whatever extra you've got left at knocking out that last remaining piece of (mortgage) debt ASAP.

This will knock a serious chunk of total interest paid off the life of your mortgage, saving you tens (or even hundreds) of thousands of dollars overall. Plus once you've paid it off early and no longer have that monthly house payment that you have to factor into your budget, you have much greater financial security (for when shit happens) and freedom (to put that money towards whatever else you want), from that point onward.

I'm currently making 2 full extra monthly payments towards principal every year. And as my income continues to rise, that additional income gets rolled into the extra mortgage payments as well. I plan to have my mortgage paid off about 30% faster (if not even sooner, depending on potential future pay raises). And I stand to save about $25k in interest that I won't have to pay... And that's with a super low mortgage interest rate; the savings on unpaid interest for an even higher interest rate would be even more dramatic.

Unless I'm mistaken, generally you should be able to get a higher return percentage-wise (especially if your rate is low) off solid investments than the mortgage interest rate you're paying with the extra payments toward principle -- depending of course on how much your house is appreciating, but then again, that equity is locked up in the house. The interest rate deduction is a bonus on top of that -- which you could then invest at a higher return than you're paying, interestwise. Plus, actually having a solid, responsibly managed debt is a signal to lenders that you're a safe, awesome risk, and therefore get the best possible rate/terms should you ever want to get any type of loan in the future: auto, equity, etc.

April 23, 2021, 05:27 PM

sig2392

@RogueJSK

If you have a low rate mortgage considered at less than 5%, paying it off early rather than investing it where you can get a return over 5% is considered lost opportunity.

Historically you can make more than 5% in the markets. Depending on how far you go back even better returns in the last 10 years.

The famous past returns is no indication of future results.

I know more than one person that get over 10% consistently year after year.

They spend a lot of time studying the markets as well as individual stocks and funds.

April 23, 2021, 05:40 PM

pedropcola

That is the old wisdom that is thrown around. When you actually look into it though it isn’t all that brilliant on a lot of levels. Let’s say you have a good loan now 3%-ish. Average market return over 30 years tends to the 7-8%. Before tax. So 8 percent minus your capital gains narrowed the window but you are still ahead. What happens if the markets turns, corrects, etc? Well you have lost money in the deal. What if the market turns and you get downsized, right sized, fired, concessionaire pay scale, etc? Well now your investments still aren’t paying as much and you still have a mortgage.

There is no scenario, none, where you aren’t better off without a mortgage. Especially if you find yourself needing to cut expenses. In the first scenario you have all that money in the market as a safety net but you have to pull on it in a down market. Nobody looks forward to that.

People have gotten very comfortable with always having a mortgage. Kind of like car loans. Like it’s a normal thing to have. All the time. It’s a bad mindset.

Plenty of books say otherwise. Take the tax write off, let your money work for you, it’s the only bill that stays the same for 30 years, etc. All true to some extent but it’s also one of your biggest bills. Get rid of it.

As for the tax write off, only time someone would ever tell you to spend a dollar to save 30 cents and you agree it’s a great idea. It’s not a bad idea but it’s not a great one either. It’s also a great argument for overspending on housing.