What would you do?

[mommy4ever]

We have our FFEF nearly complete. We have a good savings that lets us breathe easy, we could survive 6 mo frugally on it.

So we want to start addressing the mortgage in September when my income is back up. So, dh wants to wait until we have an extra $5,000 and dump it on to the mortgage. I want do a once a month deposit on principal. We are not getting much on our savings account, so its not like we're losing much, and obviously the mortgage interest is higher.

If we put $1000/mo extra on the mortgage(this is within the 10% we are permitted to prepay) how much savings on a 3.95% fixed. VS. doing it only every 5 mo. IMO it is easier to do it monthly, if it's sitting there, things come up and since it isn't the FFEF, I can see it being used for little things taking longer to get that 5K in the bank to put on the mortgage.

Is there a calculator to help with that?

[nodmicks]

Mommy I'm sure Greebo or someone will come along with a calculator for you but I'm with you on putting extra $ on it asap.

[Russ]

Calculators can be found here >>> Mortgage Calculator

IMO, pay on it every month.

[Russ]

from experience... as the fund (hold and wait to pay) grows towards the $5K mark we found we were not as intense about saving. We were more relaxed in our spending because we had money in the bank.

[lotsadebt]

Why don't you look into the Bi-monthly payment. You are actually making an extra payment. I have heard it saves alot in interest over the years.

[mommy4ever]

from experience... as the fund (hold and wait to pay) grows towards the $5K mark we found we were not as intense about saving. We were more relaxed in our spending because we had money in the bank.

That's what I was thinking. It took us an extra few months to hit our FFEF, because WE SPENT. Not all of it, but it sidetracked.

We can put up to $14,000 a year extra on the mortgage. If we did that, we'd be mortgage free in less than 8 years wouldn't THAT be nice. Not necessarily realistic... but still..lol. We have to live too.

Since the bank doesn't penalize for 1 extra principal payment a month, that might be the better way to do it. Since the mortgage is just under 3% higher, we'd have greater savings that way.

We already pay weekly. That is a huge savings Now if we could max that out as well(We can up to double that payment with no penalty as well as the $14000 prepayment) we could really attack this mortgage hard....

Oh to be rid of that albatross.....

[Judi Dial]

I'd pay on it every month, just because it's that much LESS interest you'll pay!

Judi

[mndtrp]

Why don't you look into the Bi-monthly payment. You are actually making an extra payment. I have heard it saves alot in interest over the years.

Most places charge you for the convenience of them doing it for you. Some of those places even hold the money and pay the mortgage once a month. If you want to pay bimonthly, or biweekly, do it yourself, but make sure the payments go through when you make them, not just once a month.

What I would do, and what I do do, is pay extra on principal every month. If something should happen, I can just pay the minimum for a month, or if I make extra I can put extra towards principal.

[MomToTwoBoys]

Why don't you look into the Bi-monthly payment. You are actually making an extra payment. I have heard it saves alot in interest over the years.

This is how we pay on our mortgage. Actually, it's bi-weekly if you're thinking every two weeks. We make at least three or four extra payments a year doing it that way. We have about 16 years and 9 months left on the mortgage and it was a 25-year amoritization fixed rate closed mortgage. We've had the mortgage for five years now. We'll be mortgage free by the time I'm 49.

[mommy4ever]

We pay weekly right now, no fee, auto withdrawal

[gottadance]

Absolutely, pay it monthly - you're paying more in interest than you'll be getting in savings and every bit adds up! Good for you!

[mek42]

If you're following the DR plan, is now the time to look into adjusting insurance premiums for even greater cash flow and to start investing for retirement?

[mndtrp]

Actually, it's bi-weekly if you're thinking every two weeks.

I had to check, but bimonthly can also mean twice a month. Seems disingenuous to have one term mean two very different things.

[TheRootedNomad]

We would have a very hard time saving up 5 months worth of extra money without something popping up. I put what ever I can come up with on the house payment each month. You will definately save more money by paying what you can sooner rather than stashing it and making a lump some payment later. It all goes back to the compounding intrest.

[Greebo]

What the others said - the earlier you pay extra, the more you save over time.