Mortgage prepayment

**BeachFun** · 07-16-2010, 10:05 AM

I am interested in paying off my mortgage early. We are refinancing to take our mortgage term from 30 years to 15 years. Once we close on this our goal is to pay off morgage in 5 years or less. I am going to attempt to make bi-weekly payments (each payment equal to the total amount of my monthly payment) so my plan is to make 26 payments per year instead of 12. Hopefully this will work out but I will modifyour plan if it proves to be too restricted. Is anyone else aggressively paying their morgage and how are you doing?

**Russ** · 07-16-2010, 10:18 AM

We re-fi'd years ago to our current 15 year mortgage and honestly has been tough at times. That payment is pretty big but it has been worth it...now.
IMO..Wait a few months before you start making extra payments and build up a nice savings acct.

**mommy4ever** · 07-16-2010, 12:43 PM

What we did when we renewed is amortized at 25 years, but paid weekly instead. This cut us back by 8 years. THEN, the mortgage is set up that we can up to double the weekly payment. This cuts is back another 8 years. We can also prepay up to 10% of the original mortgage. IF we could do all of that, our 25 year mortgage would be under 6 years.

However there are times, we just don't have enough income to keep the double payments, so we can reduce to the minimum with no penalty, not considered late etc. Best of both worlds. As much extra as we can when we can. But no issues if we just pay the basic.

**monkeywrangler71** · 07-16-2010, 01:21 PM

Originally Posted by mommy4ever

What we did when we renewed is amortized at 25 years, but paid weekly instead. This cut us back by 8 years. THEN, the mortgage is set up that we can up to double the weekly payment. This cuts is back another 8 years. We can also prepay up to 10% of the original mortgage. IF we could do all of that, our 25 year mortgage would be under 6 years.

However there are times, we just don't have enough income to keep the double payments, so we can reduce to the minimum with no penalty, not considered late etc. Best of both worlds. As much extra as we can when we can. But no issues if we just pay the basic.

Exactly what we do, set it up with the lowest payment possible, then pay double. We were on track to pay off our 25 year mortgage in about 8 or 9 years.

We have the same plan with the next one - only this time hope to never move again so we can pay it off and keep it that way. If I'd stayed in my first house it would have been paid years ago (but then I'd have to still live next to the crazy people).

**BeachFun** · 07-16-2010, 08:28 PM

Thanks for all of the suggestions. I'm thinking that we'll make the double payments as long as things are going good and if things become tight we'll just make the monthly payment and then if we have any extra we'll put that on it too.

We would have had the house paid for in the next 2 years had we not refinanced several years ago in order to put new siding, windows and a deck on the the house. At that time we had to extend the term to make a lower payment. Now I'm anxious to get the mortgage paid ASAP.

**ladytoysdream** · 07-16-2010, 09:32 PM

What I am thinking is...
when you make a extra payment...write principal on it...so the extra goes to pay down the balance.

We had our house paid off. We borrowed the home equity loan to add a room, a deck with roof, new windows, siding and shingles entire structure just over 4 yrs ago. Note is for 10 yrs.
Plan for next February is to start doing a double payment. The second one will be marked PRINCIPLE.

Hubby has already been told before he can retire, that this house will be paid off....and his truck also ....no ands ifs or buts.

**mommy4ever** · 07-16-2010, 10:44 PM

We don't have to make that note. I just do it online, and it is automatically applied to principle. BUt you want to check how your mortgage is set up!

**savvy_sniper** · 07-17-2010, 08:09 AM

We plan to have our house paid off in 15 years or less, BUT to be on the safe side we got a 30 year fixed rate mortgage. We just pay extra every month toward to the principle.

**scottp999** · 07-18-2010, 07:57 PM

Sounds like a plan. I just started to accelerate the paydown on mine. Been on a 30yr fixed for 7 years (5.5%). Now going to try to pay it off in 4 years. It's my last debt, and it has to go. Hoping to hang on to employment.

**Michelle68** · 07-18-2010, 09:34 PM

Originally Posted by savvy_sniper

We plan to have our house paid off in 15 years or less, BUT to be on the safe side we got a 30 year fixed rate mortgage. We just pay extra every month toward to the principle.

That's exactly what we do.

**Preston** · 07-19-2010, 09:31 PM

My mortgage payment is $698. i won't pay less than $700... figure that extra $2 won't be missed.

But when we're out of consumer debt, I'm just going to set it to $1000 min payment for mortgage.

I hate having a mortgage. I hate even more it's with bank of America.

**Preston** · 07-19-2010, 09:34 PM

oh yeah. unless there is a huge different in interest rate... I would just put the money that would go toward closing costs in the refi into just paying the mortgage off.

it really won't help you if you plan on paying it off early anyway.

**mongo** · 07-22-2010, 04:29 PM

Fixed or Variable mortgages it's a tough choice.

**Preston** · 07-22-2010, 04:40 PM

Originally Posted by mongo

Fixed or Variable mortgages it's a tough choice.

Not really because..

1) You don't want your #1 expense and your living costs to be that variable I would want as little variance in this as possible. Utilities vary and although I've budgeted for it the unpredictability annoys me.

2) Interest rates right now are at a low and the only place they can really go is up. So why would you want to risk having your mortgage go up?

Fixed is the only way to go. Less BS. Less Variance. More Predictability.

**craftypam** · 07-22-2010, 05:03 PM

If your interest rate is now good; just pay extra on the mortgage that you have now. I hate having debt and every extra money I had went toward paying off my mortgage. I actually paid off the end of my mortgage with a h/e because the interest rate was cheaper than my mortgage. You know when you get that extra payday during the year; apply it toward your mortgage. Make sure you will not be penalized for paying off early. In this tough economy it has been WONDERFUL not having a mortgage.

If you take out a 15 year and have a tough month you still have to pay that higher payment. You can have the same results by having a 30 year and making extra payments and if you can't afford to pay the extra 1 month its not a big deal.