Warning

 

Close

Confirm Action

Are you sure you wish to do this?

Confirm Cancel
Member Login
Posted: 2/8/2006 5:04:10 PM EDT
[Last Edit: 2/8/2006 5:07:19 PM EDT by Johnny_Reno]
I'm in my third year of a 30 year mortgage being financed at 6%. My current principal balance is $133,361. My monthly mortgage is $985.73 of which $169.58 applies towards principle. I am currently making monthly payments of $1100.00 thus adding an additional $114.27 towards my principle balance.

Now, here's the question - Assuming that I continue to make $1100 monthly payments for the remainder of the loan, how many years/months will I be knocking off of the back of the loan?
Link Posted: 2/8/2006 5:10:46 PM EDT
Dude, you need the Mensa Forum. We do guns here.
Link Posted: 2/8/2006 5:12:38 PM EDT

Originally Posted By BobCole:
Dude, you need the Mensa Forum. We do guns here.




So, I've finally asked the question that Arfcom can't answer.

Link Posted: 2/8/2006 5:14:22 PM EDT

Originally Posted By Johnny_Reno:

Originally Posted By BobCole:
Dude, you need the Mensa Forum. We do guns here.




So, I've finally asked the question that Arfcom can't answer.





No, there's a geek in here somewhere. He just ain't here right now.
Link Posted: 2/8/2006 5:14:22 PM EDT
Guessing off the top of my head it might come somewhere around 17 yrs, you can figuer it out by figuering each month, take you balance of each month , find your intrest(balance times rate div. by 12), and continue that for each month.
Link Posted: 2/8/2006 5:14:39 PM EDT
[Last Edit: 2/8/2006 5:15:11 PM EDT by Greywolf2112]
Link Posted: 2/8/2006 5:14:56 PM EDT
[Last Edit: 2/8/2006 5:16:35 PM EDT by VoodooChile]
You'll knock off 40 payments I think...I did it in a hurry

Try This

www.mortgage-calc.com/debtconsolidation/debt_investment_calculator.html

ETA..forget the guess but try the link
Link Posted: 2/8/2006 5:17:25 PM EDT
That would give you about 187 more payments to go.
Link Posted: 2/8/2006 5:18:24 PM EDT
google is your friend
http://www.realestateabc.com/calculator/

By following this schedule, your loan will terminate in 244 months (20.33 years) (assuming you are already in year 3, i figured 27 more to go)

lots of calculators on that link.
Link Posted: 2/8/2006 5:24:42 PM EDT
I know this may sound weird, but instead of making a payment of $1100.00 make your normal payment, and then two weeks later make your payment of $115.00. This will only help you if your lender applies the 2nd payment towards principle. You will have to ask them specifically how they handle payments. What this does is lower the amount of intrest to be paid between normal payments, putting more $$$$ towards your principle and less towards intrest.

Unfortunately, my lender does not handle payments made other than on due date. Therefore I can pay as much as I want during a month, but it will only be applied once during the month. It sucks! Find out how your lender will handle 2nd payments. It will speed up the payoff process even more than what you are already doing.
Link Posted: 2/8/2006 6:45:30 PM EDT

Originally Posted By blackta6:
I know this may sound weird, but instead of making a payment of $1100.00 make your normal payment, and then two weeks later make your payment of $115.00. This will only help you if your lender applies the 2nd payment towards principle. You will have to ask them specifically how they handle payments. What this does is lower the amount of intrest to be paid between normal payments, putting more $$$$ towards your principle and less towards intrest.

Unfortunately, my lender does not handle payments made other than on due date. Therefore I can pay as much as I want during a month, but it will only be applied once during the month. It sucks! Find out how your lender will handle 2nd payments. It will speed up the payoff process even more than what you are already doing.



Ah, you have learned the difference between a "simple Interest" loan and a "Mortgage" Interest loan.

Oh, by the way, the finance police remind you that you owe PRINCIPAL not principle on your loan.

Link Posted: 2/9/2006 12:56:21 PM EDT

Originally Posted By DAC_2141:

Originally Posted By blackta6:
I know this may sound weird, but instead of making a payment of $1100.00 make your normal payment, and then two weeks later make your payment of $115.00. This will only help you if your lender applies the 2nd payment towards principle. You will have to ask them specifically how they handle payments. What this does is lower the amount of intrest to be paid between normal payments, putting more $$$$ towards your principle and less towards intrest.

Unfortunately, my lender does not handle payments made other than on due date. Therefore I can pay as much as I want during a month, but it will only be applied once during the month. It sucks! Find out how your lender will handle 2nd payments. It will speed up the payoff process even more than what you are already doing.



Ah, you have learned the difference between a "simple Interest" loan and a "Mortgage" Interest loan.

Oh, by the way, the finance police remind you that you owe PRINCIPAL not principle on your loan.




Thanks, are you trying to belittle me? Go find a donut, finance police! I need the spelling police.
Link Posted: 2/9/2006 1:13:32 PM EDT
Nope. Sorry, don't take it personally.

Its a common error, the principal vs principle thing.

Not intended as a personal reference, I apologize if you took it that way.

Link Posted: 2/9/2006 1:15:35 PM EDT
At 6% (not factoring in the tax savings you get from deducting interest from your taxable income), why would you want to pay off your mortgage early?
Link Posted: 2/9/2006 1:21:22 PM EDT

Originally Posted By jthuang:
At 6% (not factoring in the tax savings you get from deducting interest from your taxable income), why would you want to pay off your mortgage early?




So you send a finance company a large percentage to keep from sending the gov a smaller one?
Link Posted: 2/9/2006 1:33:48 PM EDT

Originally Posted By MrClean4Hire:

Originally Posted By jthuang:
At 6% (not factoring in the tax savings you get from deducting interest from your taxable income), why would you want to pay off your mortgage early?




So you send a finance company a large percentage to keep from sending the gov a smaller one?



I've never understood that either?

Most people also never factor in that you are only getting back something like 28 cents on the dollar only on the interest amount that puts you over the standard deduction ($5k single $10k married) .
Link Posted: 2/9/2006 2:54:43 PM EDT

Originally Posted By MrClean4Hire:

Originally Posted By jthuang:
At 6% (not factoring in the tax savings you get from deducting interest from your taxable income), why would you want to pay off your mortgage early?




So you send a finance company a large percentage to keep from sending the gov a smaller one?



No.

You could make a lot more on your % by taking the $ that you use to pay down your mortgage and investing it. The cost of your capital is significantly less than 6% because you have the interest deduction, so the bar is not very high.

So by paying off your mortgage early, you're essentially leaving money on the table.

For more, read Ric Edelman's "The New Rules of Money". One of those rules is "no one ever got rich by paying down your mortgage early."
Link Posted: 2/9/2006 3:09:52 PM EDT

Originally Posted By jthuang:

Originally Posted By MrClean4Hire:

Originally Posted By jthuang:
At 6% (not factoring in the tax savings you get from deducting interest from your taxable income), why would you want to pay off your mortgage early?




So you send a finance company a large percentage to keep from sending the gov a smaller one?



No.

You could make a lot more on your % by taking the $ that you use to pay down your mortgage and investing it. The cost of your capital is significantly less than 6% because you have the interest deduction, so the bar is not very high.

So by paying off your mortgage early, you're essentially leaving money on the table.

For more, read Ric Edelman's "The New Rules of Money". One of those rules is "no one ever got rich by paying down your mortgage early."



Word.

Money needs to grow in order to outpace inflation. Paying off your mortgage early doesn't grow money. Investing grows money. Chances are good that your home's value is appreciating at or better than 6%. If so, then don't worry about paying it off quickly because the value is outpacing any potential interest saved (throw in a few standard caveats here). Do you have a car payment? If so, pay that off early since your car goes down in value with every mile you put on it. Same with credit cards. Are you funding a retirement account? If not, start putting that extra $115.00 a month into a IRA or something. How about an emergency fund? Yeah, a savings account may only pay 2 or 3 percent, but a tiered approach using savings and rolling over various length CD's will give you a certain amount of liquidity, asset security and slight hedge against inflation.

HTH

Trey
Link Posted: 2/9/2006 5:10:44 PM EDT
[Last Edit: 2/9/2006 5:13:14 PM EDT by Johnny_Reno]

Originally Posted By jthuang:
At 6% (not factoring in the tax savings you get from deducting interest from your taxable income), why would you want to pay off your mortgage early?




Because I'm 43 and don't want to be making house payments when I'm 70.


Oh, BTW - I used my mortgage company's amortization estimater and found out that the extra $114 per month will allow me to pay off the mortgage in 2026.

Seven years early.
Link Posted: 2/10/2006 9:31:57 AM EDT
[Last Edit: 2/10/2006 9:32:21 AM EDT by jthuang]

Originally Posted By twodeucetrey:
Money needs to grow in order to outpace inflation. Paying off your mortgage early doesn't grow money. Investing grows money.



Agreed!

Especially with mortgages taken out in the last few years, most people will never see money lent so cheaply -- the effective cost of capital is probably 4% or less for most people on this board. Why pay down your mortgage ahead of schedule when that extra money could be working for you?

Link Posted: 2/10/2006 9:40:35 AM EDT
87 months.




Originally Posted By twodeucetrey:
Money needs to grow in order to outpace inflation. Paying off your mortgage early doesn't grow money. Investing grows money.






Agreed!

Especially with mortgages taken out in the last few years, most people will never see money lent so cheaply -- the effective cost of capital is probably 4% or less for most people on this board. Why pay down your mortgage ahead of schedule when that extra money could be working for you?



This advice is the best advice. I have been in the Mortgage Industry for the last 10 years.
Top Top