Fastest way to pay down mortgage

Hey all, not new to home ownership and purchased my second place a year and a half ago. It was only 12 years old and was updated mostly by the first owner who was a builder. So unlike my first rehab type property where i needed cash - i moved in, put in hardwood and haven't spent a dime fixing or updating anything else.

Each month I've made my mortgage payment and when a another check came in i'd make a small principle payment for say $200-400 depending on how much cash i had available. This method works and cuts the mortgage principle down, but there seem to be many other methods to do so and recommendations for lowering the amount of interest due monthly. I'd like to hear from some people before i spend a small fortune eliminating interest thus robbing my car/motorcycle fund.

Notes-have a good interest % rate so refinancing not worth it, have plenty of equity in place if i needed a home equity loan per say..

Currently thinking:
1. Save up quite a bit more and pay off a couple thousand in principle which should essentially lower the amount of interest owed and move me into a lower interest bracket and higher principle payment-mortgage recasting/lump sum payment.
2. Split mortgage payment into two monthly payments. Have heard this reduces a few years off the life of a 30/yr loan.

Thanks.

 

Pay a little over and pay biweekly or do an extra mortgage payment at the end of every year just on the principal

 

I refinanced my original 30 year mort to a 15 year and that was a huge help. Other than that just pay extra whenever you can, you can just up the amount you pay every month so the excess goes to principal. I paid mine off recently, zero debt and more fun money to spend now! I love it.

 

Rob banks.

 

Bank robbing me monthy can't retaliate yet

 

Go online and find a interest/principle calculator. You can also ask your mortgage servicer to run specific scenarios like twice monthly payments, the second monthly payment being principal only.

 

We paid 2 payments per month which was automatically taken from my every 2 week pay check. This works out to 26 payments. We would make an additional payment every year. After 8 years, we were at a point where we could pay off the remainder of the note.

This allowed us to fund retirements aggressively as well.

 

I agree w @El Duderino & @TacomaSport86 .


In addition, if you haven’t done so yet, get online access to your mortgage account. It will most likely have amortization calculators that will let you see your new maturity date based on additional principal paid.

I wouldn’t bother with any extra principle payment under say $100. $2 bucks isn’t gonna make any difference (assuming you didn’t mean $200-400).

Once you establish what you can do regularly, stick with it as best you can.

Beware of prepaying interest.

 

In short?
Live cheaply, and put all of your spare money towards payments to the principal.
It's up to you how much you want to sacrifice your day-to-day quality of life to pay your mortgage off sooner.

Edit- Sidebar: Don't wreck your savings account paying your mortgage down. If you're living paycheck to paycheck because you're dumping every spare dime into your mortgage principal, you won't have anything in reserve in case of an 'unexpected life event'
I actually used to work with a guy who did just that, then got laid off and nearly lost his house because he got behind on his mortgage before he got another job. Even though he was something like 5 years ahead of the game based on his extra payments to principal, the monthly mortgage payments were still due while he was job hunting.

 

beg , borrow and steal or work more ( mas trabajo ) for more $$$ dinero , Si

 

https://www.calculator.net/mortgage-payoff-calculator.html

Here is a calculator I have used to look at different options for paying down a mortgage earlier, this helped us go from a 30 year to a 15 year and then timing payoff to retirement.

 

I hear you, and good point. I have considerable savings just in case that happens. While its great transferring some money to savings, when looking at the amount of interest spent each month its got me wondering if its really worth saving that much to be throwing out $750 in interest per month.

Nice find, will plug in some #'s for different scenarios.

 

It's all about balance. Too much of one doesn't leave enough for the other.

 

Die+Life Insurance Policies

 

No secret method, just the time value of money. Assuming your loan is an actual 365 basis. Divide your interest rate by 365, multiply by your principal balance, this will give you your per diem. Multiply your per diem by the number of days since the last payment, this will give you the interest portion of your P&I payment. The sooner you make the payment the greater the impact to your outstanding balance.

 

I've gone the other way. Every year I max retirement contributions first. I work for a company that offers no 401 so I max my IRA. Once that's maxed then I start chipping away at the house. I've run the numbers and at my age it's better for me to get the compounding interest for retirement now. My house is not very likely to loose value in the short or long term.

OP, it's basically what everyone is saying. Run the numbers. Come up with a plan that works for you and stick to that plan.

 

If you can invest in sth w a higher yield than your mortgage interest rate then that is what you should do.

 

I hail from the church of St. David (Ramsay). He would say
1) save up a 1k emergency fund
2) pay off all debt but your house
3) save up a 3-6 month emergency fund
4) put 15% of your income into a Roth IRA
5) throw everything else at your mortgage principle
(Saving for kids college is in there somewhere, but I never pay attention to it bc I dont have any)

It seems like the long way around to paying your house off, but if you have credit card debt, student loans and vehicle loans, you aren't making any headway by ignoring them to pay your house off. The "baby steps" are a great way to tackle debt while minimizing risk with an end game to build wealth.

 

Been paying a little extra each month, hoping to finish off a 15 year mortgage in 10 years.

 

Rent