For instance, my mortgage (with taxes and insurance) is $1000 a month.
If I paid an extra $1000 a year how much would it take off at the end of the loan?
Say I have 11 years and 8 months left, would it take it down to 10 years and 8 months?
~A.
Making a lump sum payment of $10,500 on 02/2012 took off 4 years and 2 months.
So I guess it's worth it to add an extra $1000 from my investment account.
Seems like I will save more interest than what I would earn with that $1000...... I think.....
jeesh, I'm no good in math :)
A. - you need to talk with your mortgage company - they should have a mortgage calculator that will plug in interest rate, loan balance, etc.
When you apply extra payments - you need to make sure it goes to the PRINCIPLE NOT interest.
I think you can google mortgage calculators....
I have been told that if you pay one extra payment per year, every year, during the course of a 30 year loan, that you take approximately 7 years off the life of the loan. So, 23 years instead of 30 years.
But, if you don't do it every year (start midway through the life of the loan), or the length of your loan is different, you'd probably need to sit down and use an amortization calculator to see when the payoff would happen.
http://www.daveramsey.com/article/mortgage-calculator/lif...
Speak with the loan holder to see how the extra payment would give you the most mileage.
say for instance your ordinary payment of $1K goes 800 to interest and $200 to principle. depending on how your loan is structured, it might make a difference whether you make a payment of $2K on the first of the month, v. a payment of $1K on the first and $1K on the 15th, and then pay another $1K on the first of the following month. More food for thought, if you can swing it, paying $84 extra a month might get you further ahead than paying an extra lump sum $1K.
ask for real clarity.
good luck to you and yours,
F. B.
Use a mortgage acceleration calculator to find our your ballpark savings.
http://mortgage-x.com/calculators/extra_payment_calculato...
It depends on what your interest rate and current loan balance is. Call your lender and ask them to send you a new amortization schedule to show you the difference.
There are lots on online calculators you can use to get actual figures for your circumstances.
But with a 30 yr fixed rate mortgage, O. extra payment per year pays it off 10 years sooner.
ETA: our advisor was very clear--apply it to the PRINCIPLE only!!!
Depending on your interest rate it may be smarter to put that money into savings and invest. It just depends, can you earn a higher rate of return then your current interest rate?
Use an online mortgage calculator to determine how much you'll save and then use a compound interest calculator to determine what you'll make if you invested it. Also you get to write off your interest paid every year. Figure out what that's worth to you even though at this stage in your loan it may not be much.
Finally as others have said if you do decide to pay down the loan more quickly talk to your lender about pre-payment penalties and make sure the extra $$$ is going towards the PRINCIPAL.
Great you only have 11 years at the most, it will feel awesome to own your home free and clear!
I recall my broker telling me that one extra payment on my 30 year plan would cut off about 7 years. Now, I would think that it has to do with many factors. Give your broker a call.
You have to look at the principal on the loan. An extra payment would be subtracted from the principal only, not the interest. A great thing!
Keep in mind that a mortgage is probably the lowest interest loan you will ever get, so if you have any other loans or credit debt you should pay those before you put the money on your mortgage.
In box me with your email address and I will send you a spreadsheet that will help you with this calculation.
-L.
Depends on your interest rate. Also remember that mortgages are front-loaded with the interest, so paying more earlier in the loan has a much larger savings than paying later.
I was listening to the radio on a road trip one time, it's been a while, and Dr. Dobson was on. He was talking about how if you just paid an extra $50 per month on your house bill it could take off $17K+.
I think that $50 could be more doable each month instead of a lump sum. I'd ask a Realtor or banker that does mortgages so I could be sure what is the best way to bring down the balance.
So you want to pay one extra payment per year (why only one?) - without a calculator (cuz hey, you coulda pulled out a calculator), I would guestimate that equals a couple years early - given the 11 extra payments and the interest not compounded.
