Pay off mortgage faster

**corn18** · 07-19-2017, 10:52 AM

Worst idea ever. Just put the money you would pay towards the $10,000 person loan and put it towards your mortgage.

**disneysteve** · 07-19-2017, 10:55 AM

Originally posted by ucbears22 View Post

I have a personal line of credit that is 9% interest

Why even have that line open? I wouldn't borrow money at 9% unless it was literally to save a life, like for an organ transplant or something equally catastrophic.

This is a truly horrendous idea and will cost you thousands of dollars in interest.

Yes i would accrue interest on the personal loan but it would get my mortgage down and eventually save money on interest.

Just to be clear, you would be accruing way more interest on the personal loan than you would be saving on the mortgage, so you'd be losing money every step of the way.

**Braje** · 07-19-2017, 11:11 AM

Why would you think borrow money at 9% to pay mortgage would be a good idea. What is the rate on your mortgage? Less then 9% I bet, probably closer to 4%

**disneysteve** · 07-19-2017, 11:13 AM

Originally posted by Braje View Post

Why would you think borrow money at 9% to pay mortgage would be a good idea.

A lot of people are really bad at math.

**ucbears22** · 07-19-2017, 11:35 AM

so 9% interest rate on 10000 over 12 months would be 875 in interest$. time that by 10 years (amount i would need to do this to pay off) is 8,750. i think over the next 10 years i would rather pay interest on my regular payments plus 8750 than 16 years of regular payments (which adds up to way more in interest).

**disneysteve** · 07-19-2017, 11:49 AM

Originally posted by ucbears22 View Post

so 9% interest rate on 10000 over 12 months would be 875 in interest$. time that by 10 years (amount i would need to do this to pay off) is 8,750. i think over the next 10 years i would rather pay interest on my regular payments plus 8750 than 16 years of regular payments (which adds up to way more in interest).

What's the interest rate on your mortgage?
And what tax bracket are you in?

**corn18** · 07-19-2017, 11:53 AM

Originally posted by ucbears22 View Post

so 9% interest rate on 10000 over 12 months would be 875 in interest$. time that by 10 years (amount i would need to do this to pay off) is 8,750. i think over the next 10 years i would rather pay interest on my regular payments plus 8750 than 16 years of regular payments (which adds up to way more in interest).

You'll pay a LOT less interest on your mortgage if you send $906.25 ($10,875/12) extra per month. You are trying to compare an amortized schedule to simple interest schedule. Don't borrow @ 9% to pay off something at 4% (or whatever your mortgage interest rate is).

"Don't think Meat, just throw." (not an insult. A quote from one of the best sports movies ever)

**greenskeeper** · 07-19-2017, 12:24 PM

Originally posted by corn18 View Post

"Don't think Meat, just throw." (not an insult. A quote from one of the best sports movies ever)

https://i.makeagif.com/media/10-05-2015/2jHBbH.gif

**Jluke** · 07-19-2017, 01:34 PM

Mentally you may be ready but financially you're not there.

Have you considered refinancing to a 10-, 15- or 20-year mortgage?

For motivation I had a mortgage of 168k and paid it off in 10 years. 94k was paid off the last three years. I refinanced twice along the way.

It can be done

**scfr** · 07-20-2017, 06:42 AM

I can't imagine a scenario where it would make sense to take out a high-rate personal loan to pay off a probably-lower-rate mortgage. Help us understand the situation a bit better.

Why are you fed up with your mortgage? Is it for a reason other than the interest you are paying on it? Do you dislike dealing with your mortgage lender for some reason?

What is the interest rate on your current mortgage?

Is there any penalty for early payment of the mortgage?

Do you take a standard deduction on your tax return, or do you itemize? If you itemize, by how much do your itemized deductions exceed the standard deduction?

**disneysteve** · 07-20-2017, 07:49 AM

Originally posted by scfr View Post

I can't imagine a scenario where it would make sense to take out a high-rate personal loan to pay off a probably-lower-rate mortgage.

There is no situation where this makes any sense.

**corn18** · 07-20-2017, 08:20 AM

I couldn't stand it so I ran the numbers for you. Assumed 9% rate on personal loc, 4% on 30 year mortgage for $100,000.

Your way: borrow $10,000 each year on loc, pay it off in 1 year ($874.51 monthly payment). Cost = $3,459 total interest over 7.125 years (that's how long you'll need to take out loans). Total interest saved = $57,804. So total saved is $57,804-$3,459 = $54,345. Loan payoff is 7 years 1 mo.

Better way: Pay an extra $874.51 on your mortgage each month. Total cost = $0. Total interest saved = $56,854. Payoff time is 7 years 2 months.

With your way, you would pay an extra $2,509 in interest and buy yourself a month for all that trouble.

Hope this helps.

Tom

**scfr** · 07-20-2017, 09:51 AM

Originally posted by disneysteve View Post

There is no situation where this makes any sense.

Anything's possible. Which is why I think we need a bit more information to help us understand where the OP is coming from. When they began their statement with "I am fed up with my mortgage" it made me wonder why.

For example, I know of one private mortgage where the borrower declared "I want to get this *&^%$ thing paid off so I don't have to deal with that *&^#@ ever again."

**disneysteve** · 07-20-2017, 09:58 AM

Originally posted by ucbears22 View Post

I came across a post on another website on a strategy

Can you share where you saw this idea posted? I'd love to check it out.

Pay off mortgage faster