Paying down a mortgage - not a debate about whether it makes sense

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Paying a mortgage off early when the interest rate is good is such a middle class thing to do. Rich people don't have a mortgage -- they have two.

Yes, but people who are going to get rich, from a current non-rich condition, don't do it by having two mortgages. Thanks for playing.

Actually, leverage is EXACTLY how the non-wealthy become wealthy.

Speaking as someone who has done it: nope.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Paying a mortgage off early when the interest rate is good is such a middle class thing to do. Rich people don't have a mortgage -- they have two.

Yes, but people who are going to get rich, from a current non-rich condition, don't do it by having two mortgages. Thanks for playing.

Actually, leverage is EXACTLY how the non-wealthy become wealthy.

Speaking as someone who has done it: nope.

Okay then. How about this?


Actually, leverage is EXACTLY how the wealthy become wealthier.

[Anonymous]

Good for you, OP. It's a great feeling when you start to make a dent. If you have enough to pay down the mortgage, you probably have enough to refinance to a slightly more expensive 15-year loan with a lower rate. Here is what we did:
-Bought in 2017 with 4% $385k 30-year loan ($2500/mo) - original maturity date was 2047
-Paid down about $25k between 2017 and 2019 (only about half of that was from monthly mortgage payments, the rest was add'l principal payments we made)
-Refinanced in 2019 to a 3% $360k 15-year loan ($3000/mo) with a maturity date of 2034

Since we refinanced in 2019 we have paid down about $70k and if we made no extra payments we would pay it off in 2032 (15 years after we took out the original 30 yr loan, 13 years after we took out the 15 year loan). I suspect we will continue to make extra payments at the same clip we've been going at and end up paying it off somewhere between 2025 and 2030. I'm a big fan of paying it down because I would probably just keep the money in savings otherwise, and because we've paid down so much, a significant amount ($1500) is going to our remaining principal every month.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We paid $500 extra per month. I used to check the amortization schedule every now and then and I LOVED seeing the payoff date change (sooner than before).

Eventually the balance hit $60K and we decided to pay it off using a small inheritance and cash on hand. Best. Day. Ever.

Do mortgage companies keep updated amortization schedules online? We only have our original paper copy which is no longer accurate, and haven’t been able to find a calculator online to see our payoff date change.

I used the Dave Ramsey amortization calculator online and just had to play with the numbers a little to make it accurate

Our mortgage is with Suntrust and their amortization schedule in our documents accurately reflects the adjusted date.

[Anonymous]

We have an investment property that we plow all profits back into the principal. Starting loan amount 341k/30yr/2.875. Current extra payment is $500. Current savings in interest 64k, shaving off 10.5yrs. Ad we increase rent, we will increase principal payments.

Our goal is to.1032 exchange this into our retirement home and be able to keep all the tax free profits from our primary home and not have to dip into that money for housing.

The net is for renters to fund our future housing costs.

[Anonymous]

^^^1031 I mean

[Anonymous]

For every person who got rich as a result of leverage, there is another person that ended up poor.

Many of are not looking to gamble, we are looking for stability.

Back to OP's question, a 15 year is the best way as it imposes a discipline and gets you a lower rate. Seeing a big chunk of principal paid off every month right from the start is very satisfying, and very different from the 30 year ones where you are mainly paying interest at first.

[Anonymous]

We are 2 1/2 years into our 15 year mortgage and on track to pay it off in another 4 to 5 years. The mortgage professor's early payoff or extra payments
calculators are helpful to map out a plan or timeline for your payoff. We basically make a principal payment equal to our mortgage payment each month and add any increases to our income to the house. Like you we aren't concerned about whether it's the most lucrative use of our money. We save for a healthy amount for retirement and have a modest but fulfilling life. Having a paid for house will give us peace of mind. My husband and I start out broke. When we got married 10 years ago, we were struggling to pay for basic necessities. I had a low paying entry level job and he was working part time unloading trucks and hunting for a decent job all the time. It took 3 years before we made any major progress. My husband still worries that he'll be back unloading truck again despite us both having 100k salaries in stable career fields. In his mind no mortgage means he will never have to worry about the basics again and that's worth a little less in lifestyle and investments. Good luck on your early payoff journey!

[Anonymous]

Old thread, FYI.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We locked in a 15 year mortgage at 2.5% when we were 35. We are comfortable with pay off at age 50.

So neither of you or PP before you are paying your mortgages down. Cool story?

I’m the prior pp. I’m paying extra and making an extra payment a year. You don’t consider paying off a mortgage in 12 years paying it down?

None of the subsequent facts were in your first post.

No, nothing in your first post indicates you are paying it off early.

[Anonymous]

In 2019, we paid off the mortgage on a home we bought in 2002. A few years in, as our incomes increased, we started off by paying a couple hundred extra with each monthly payment. Each time we refinanced to take advantage of better interest rates, we kept paying at least the same monthly amount as under the older mortgage.

Could we have taken those extra funds and invested them elsewhere an got a better ROI? Probably.

[Anonymous]

No need to debate. It's not a good decision.

[Anonymous]

I would put an extra amount toward principal every month as you have the extra money (please max tax deferred options first) then once you are able to refi to a shorter term and it makes sense interest rate wise, do that .

[Anonymous]

I paid off my mortgage in 9 years. Every bonus I threw money at principal.

Also low interest rates is an opportunity. For instance early 2013 interest rates were very low. Shot up later that year. Instead of refinancing I sold 200k of bonds I owned and put it at principal.

Do the bi-weekly option most banks set it up for free so extra payment, then round up mortgage payment. Maybe like $2,249 becomes $2,300. You won’t notice it much at all

[Anonymous]

Anonymous wrote:No need to debate. It's not a good decision.

Usually it isn’t. But my friend in Feb 2000 sold 600k worth of internet stocks and paid off mortgage did well.