Is anyone paying down their mortgage (extra principal)?

[madisonlovestoshop]

Who is paying down their mortgage? What is your principal balance? What are you on average paying per month toward the principal? I think it's better to pay extra each month instead of worrying about making 2 payments per month. What is everyone doing?

[feh]

No longer have a mortgage, but did pay a couple hundred extra toward principal each month. Maybe more than a couple; I don't remember any more...

[JoshuaHeckathorn]

I'm paying double each month. I have an ARM that's at 3% right now, but I'm sure interest rates will be heading north soon so I'm trying to take advantage of the low rate while it lasts.

[greenskeeper]

Originally Posted by madisonlovestoshop

Who is paying down their mortgage? We are What is your principal balance? not sharing that What are you on average paying per month toward the principal? no less than an extra principal pmt, most times a double pmt I think it's better to pay extra each month instead of worrying about making 2 payments per month. What is everyone doing?

If you look at your amortization schedule you can easily see how much interest you knock off (save) with each extra principal payment. If you can't afford to send a complete extra payment every dollar helps, especially early in the mortgage when most of your payment goes towards interest.

Example. On a $250k 30yr mortgage at 6% adding only $20/month will save $12,295.71 and pay the mortgage off a year early! And that's only with sending in an extra Jackson every month.

[disneysteve]

We are paying extra. The amount varies month to month but we should have our 15-year loan paid off in 7, maybe even faster if I get tired of having it. I may decide to just write a check and pay it off when the balance gets low enough. It also depends on how long our cars last.

[maat55]

I persoanlly do not. We have 14 years left on a 20 year note. We are fully funding our Roths and my wifes 401k to the match. If I were to ask for more than this, I would likely end up divorced.

[bones72]

We pay 10 extra a month on our house payment, but fill the Roth's and the retirement plans at work to the matching level. We also have a note on our rental house that we attack regularly with up to a triple principal payment. I expect to pay off both in less than 5 years. BTW, the house note is down to 36500,originally a 15yr, 81000,5.625. The rental house is 8128 balance, probally gone within the year, if we get tenants!

[AtoZ]

Why not use the "extra" money you would use to pay off that low interest loan and invest it? You could likely pay for your mortgage payment with the dividend?

[JuniorTT]

We started with a 30 yr loan of $265.5k in May of 2004 and have used additional principal payments of varying size to get it down to $34k today. DW stopped working 2 months ago (staying home with our new baby) so the additional principal payments have suddenly come to a screeching halt If we make regular payments from here on out the mortgage will be done in exactly two years. If she goes back to work part time then we'll be done with the mortgage by the end of this year. Either way, can't wait to be 100% debt free!!!

[disneysteve]

Originally Posted by AtoZ

Why not use the "extra" money you would use to pay off that low interest loan and invest it? You could likely pay for your mortgage payment with the dividend?

It is a risk/reward issue. Prepayments on a 5% mortgage give you a guaranteed 5% return (tax issues aside). Investing may return more or less or may even lose money.

We fully fund a Roth for each of us. I fund a SEP-IRA with some side income I earn. My wife puts 50% of her income into her 401k. We put money into a taxable investment account each month. We contribute monthly to our daughter's 529 plan. And after all of that, we put "extra" money toward our mortgage principal. It essentially serves as part of the "fixed income" portion of our asset allocation.

As long as you have all of your financial basics covered - debt-free except the mortgage, 6-month EF in place, 15% of income going toward retirement and 5% of income going to other savings needs, I think prepaying the mortgage is a reasonable next step.

[Fizgig]

I will be soon. I'm 7 years into a 30, 5.5%, $583/mo pmt, $92k left. I'm going to put $15k on it next month (part of my severance money), then pay $1500/mo. That will pay it off in about 4 1/2 years - hopefully sooner if I get any windfalls between now and then. I save 15% of my gross in a 401k and a Roth, have an additional 10% salary match from my new employer, and have a 10 month EF. I really don't feel the need to put any more money into the market and would rather own property free and clear.

[Frugal]

We have a good interest rate, but can't afford to make extra principal payments right now. I will try to put that extra $20 a month towards it as soon as possible, because I am not happy how they have us pay off mainly interest instead of principal at the onset of payments on a mortgage.

Every DOLLAR you can put towards your principal on a mortgage, or other loans like student loans, will help reduce the interest you pay over the life of the loan, and save you money by reducing your repayment time.

[tripods68]

We pay extra $13.26 a month.

[GREENBACK]

Originally Posted by AtoZ

Why not use the "extra" money you would use to pay off that low interest loan and invest it? You could likely pay for your mortgage payment with the dividend?

I go this route with the expectation of earning more than 4% in long term investments. I wouldn't do this if interest rates were a lot higher.

I also still have money to invest outside of paying mine down and have the available liqudity to quickly pay my loan off if push comes to shove.

[bennyhoff]

I had been adding a few hundred every month for years. The extra would go up and down depending on how I felt about my finances, but I always added a little extra. In the past year with the end in sight, I've made a major increase in my payments. Last month and this month I did about 2.5 times the normal payment. With only a few months left for me, the pain will be short lived.

[FrugalGirl321]

We're prepaying heavily. We're in a 10 year loan with 9 years left. Our scheduled payment is $1050 but we pay $2200 every month. We have 21-24 months left.

We aren't comfortable leveraging our home mortgage balance for potential higher gains in investments. Prepaying is not for everyone. (We are fully funding 2 Roth IRA's and my husband's 401K).

[zakity]

We just did a new mortgage back in January. We got a much lower interest rate. It cut the payment in half. But, I am still paying the old payment. I will have the house paid off in 4.5 years if all goes well.

[readytorock]

Our monthly payment is $925 including property taxes. We prepay as much as we can each month, Some months that's $3,000 extra if my business does well, other months it's only $200 or $300 if sales are slower. My personal goal is to have the 30 year mortgage gone in 5 years total. So far, we're on track.

[Michael01]

One of the most significant benefits of prepaying your mortgage is interest payment savings. You will end up saving a good amount of money on interest payments.

[thomsoad]

I have a 10 year ARM of which 5 years still remains. I live here in Phoenix so needless to say I am incredibly upside down. So I thought long and hard about what to do in my situation.

Here is my thinking and what I did and am doing ...

I paid down my house just enough to get rid of my PMI... found that to be a VERY unnecessary $137 monthly payment.

My ARM rate now is 5.75% and I cant even begin to even think of refinancing til I pay down at least 75K. Now people are gonna tell me that the market will rebound in that time but if you lived here you would NOT be so optimistic!

So personally ... ive decided to put my xtra 1K into the stock market. I figure in the 5-7 years the market SHOULD on average provide me xtra income where if I want I can either pay off the house in full; or at least bring it down to refinance it.

The other reason I decided on this route is that in the event of a layoff in my 5 year span, I have xtra money for a rainy day as opposed to house thats not quite as upside down as it otherwise would have been... Personally, I dont see how that scenario wulda helped me.

So I say invest in the market. I actually found it the safer investment until you have enough to pay the house off.