Posted on 08/17/2024 8:13:07 PM PDT by where's_the_Outrage?
If you own a home, you've probably heard the age-old advice to pay more on your mortgage so you can pay it off faster. But what happens when you don't have thousands extra to throw at your mortgage each month?
There's a really simple way to pay a little extra -- by making mortgage payments every two weeks. Don't worry, you're not doubling your costs! Instead, you pay half your mortgage payment each time. It's a great strategy for sticking to a budget since many jobs pay every two weeks. And, because there are 52 weeks in a year, you'll actually make 26 half payments in a year. That's 13 full payments each year instead of 12.
But is paying just a little bit extra worth it? It might be.
Paying even a little more toward your mortgage can shorten the life of the loan and save you money. But how much? Let's say you purchased a $400,000 home in 2020 when interest rates were around 4%. We're also going to assume you were able to save up 20% and make a down payment of $80,000, so your total loan balance was $320,000.
If you made regular payments (meaning one a month, so 12 in a year), you'd pay off your loan in 30 years and pay a total of $229,982 in interest.
If you made 13 payments in a year, you'd pay the loan off in 25 years and 11 months, and pay $193,382 in interest. You'd save $36,600 in interest over the life of your loan.
(Excerpt) Read more at fool.com ...
11 years ago when I bought my last house which was the last mortgage I have had, Wells Fargo pissed me off so much during escrow that I told my wife we weren’t doing anything for a Year. I paid it off in 10 months and made damned sure they lost their shirt on the deal, about $25K is what it cost them to piss me off. I paid CASH for the next one that I built and finished 18 months ago.
Good point about being paid on commission. That is really tough to budget and plan.
I always paid lump sum even amounts like $2,500 or $5,000 and never had a problem.
‘Stress is silent and does not show up on any balance sheet.”
If you must have stress, run the numbers on the money you lost by not investing your extra cash in a brokerage account, instead of paying down your mortgage with more expensive dollars.
EXACTLY—DESIGNATE WHERE YOU ARE APPLYING THE MONEY
I would pay an extra $50 or $100 when I had it. KNOCKED DOWN THE LOAN quicker than I thought.
BEST TO DICTATE THAT ON YOUR PAYMENT.
NOT THE BRIGHTEST ARE WORKING AT BANKS, ETC.
Stress is about risk not missed return.
BFLR
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