Budget Help - Retirment deal

**dwnloom** · 09-02-2009, 10:05 AM

Hi guys! I have a challenge/deal from my husband. If I can get our house paid off, I can retire.

I will post my bills later today, but my mortgage is 153,000 and our payments are 1200 for a 30 yr loan. We are in our 3rd year. Is the quickest way to pay a mortgage off to just add extra to each payment? Or, is it better to send multiple payments as we get extra money.

Thanks for your opinions.

Dawn

**Greebo** · 09-02-2009, 10:20 AM

Are you asking whether you should send $1500 at one time or $1200 on the 1st and $300 on the 15th?

It won't matter significantly either way - what *IS* important is that if you're paying extra on principal, that you make it very clear that you want that extra to go to principal, otherwise they'll just apply it to a future payment.

If your payment coupons have a space for "Extra principal amount" - that's fine. If not - then yeah, send separate checks, and on the extra check write the account number and the words "PRINCIPAL ONLY" very clearly on the check.

**dwnloom** · 09-02-2009, 10:33 AM

Thanks. I didnt know if I had 300 extra to send, would it help if I sent it when I got 100, then 100 then 100 or to wait and send it all in as 300....Does that make sense?

**Greebo** · 09-02-2009, 10:37 AM

Originally Posted by dwnloom

Thanks. I didnt know if I had 300 extra to send, would it help if I sent it when I got 100, then 100 then 100 or to wait and send it all in as 300....Does that make sense?

It makes sense - but in such small amounts it won't make enough difference to make up for the cost of the extra stamp.

Lets say your interest rate is 5%. IF your mortgage compounds daily (and as I recall, most are monthly), then that means for every $100 principal you owe, you accumulate 1.37 cents per day - or $0.0137 in other words - of interest.

So if you send in $100 one week and $200 2 weeks later, you've paid the price of a stamp, which is what, $0.42 now? $0.49?, to save $0.19 in interest.

**Denvergirlie** · 09-03-2009, 09:00 AM

Originally Posted by dwnloom

Thanks. I didnt know if I had 300 extra to send, would it help if I sent it when I got 100, then 100 then 100 or to wait and send it all in as 300....Does that make sense?

You'll also want to check with your lender if you can make that many payments... some lenders will limit the number of times you can pay on an account in a month.

**itlw8** · 09-03-2009, 12:01 PM

look at your amoritization schedule see the principal if you pay that much extra each month you cut off an entire month payment. remember it will go up a tiny bit each month the more you pay early in the loan the more interest you do not have to pay.

Pay more and it speeds it up even more.