Paying down Mortgage Questions

[LiseE]

So I'm a newbie (almost a month now) but we've made many positive changes already and feeling good about where we're going.  One of the first things I did was to make a spreadsheet listing out all of our expenses.  I added our income to see what is remaining each month and then carried these fixed expenses and income over for 5 years to do a feasibility study of how long it might take to pay off our mortgage.

Here's the question ..

In my expense column I have our mortgage payment listed, however, included in our mortgage payments are our property taxes.  So lets say we pay $2000 a month on our mortgage and $500 of that goes into the escrow account for property taxes. 

In trying to see how many years it will take to payoff mortgage early, how do I factor out property taxes? (or do I?)

[Franklin]

I would break out your taxes as a separate payment in your spreadsheet.  Otherwise it throws everything off.  Plus, the taxes will continue after the mortgage is paid off.

[MDM]

See http://office.microsoft.com/en-us/excel-help/using-the-loan-amortization-and-loan-analysis-templates-HA001034640.aspx?CTT=1&origin=EC001022983 and http://office.microsoft.com/en-us/templates/loan-amortization-schedule-TC001019777.aspx?CTT=5&origin=HA001034640 (the second link can also be found on the first link).

As Franklin said, to calculate mortgage payoff you need to ignore everything other than what goes to paying mortgage principal and interest.  E.g., don't include property tax and don't include home insurance in the spreadsheet linked above.

Of course, do include taxes, food, clothing, insurance, etc. etc. in your overall planning to determine how much extra you can pay toward the mortgage.

If all the above makes sense, happy planning and doing.  If still clear as mud, let us know....

[AccidentalMiser]

Yes, what they said. 

The wisdom of paying off your mortgage early is another discussion (which is well-documented elsewhere in these forums.)

[LiseE]

Thank you .. the amortization links were perfect.  :)  And yes .. I also realized that the taxes, will unfortunately continue :(