Author Topic: Mortgage Payoff Club!!  (Read 451426 times)

Virtus

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Re: Mortgage Payoff Club!!
« Reply #1200 on: April 27, 2017, 06:40:00 PM »
I definitely need to join this thread! Our strategy is a mixture of maxing out the HSA, Roth IRA, and 401K and throwing any extra at the mortgage. We have yet to throw any extra at the mortgage due to major remolding we have been doing since we bought the house but should start extra principle payments in the next few months.

Jul-16    (171,120)
Aug-16    (171,120)
Sep-16    (170,366)
Oct-16    (169,610)
Nov-16    (168,852)
Dec-16    (168,093)
Jan-17    (167,332)
Feb-17    (166,568)
Mar-17    (165,803)
Apr-17    (165,036)


Feb-22      $0 - Projected
« Last Edit: April 27, 2017, 06:41:45 PM by Virtus »

BlueHouse

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Re: Mortgage Payoff Club!!
« Reply #1201 on: April 28, 2017, 10:04:17 AM »
Showing progress in terms of % paid off against initial home value (equity against initial sale price) so I don't get facepunched for too big of a house.
% Equity (against initial sale price)
  • 06/2012 - 25%  (downpayment & first monthly payment)
  • 06/2013 - 27%  (now paying a few hundred extra monthly)
  • 06/2014 - 30%  (now paying 1000 extra each month)
  • 06/2015 - 33%  (still paying 1000 extra each month)
  • 08/2015 - 46%  (big fat payment in preparation for a requested recast next quarter)
  • 03/2016 - 48%  (now paying 1400 extra each month)
  • 08/2016 - 53%  (now paying 6400 extra each month (only did that for 4 months))
  • 12/2016 - Long-awaited recast finally settled.  New payment is $1k less than previously.  Term resets to original 30 years, but I still want to pay this off before the 15-year mark, so I'm paying an extra 1945 each month going forward. 
  • 04/2017 - 55%  (now paying 1945 extra each month)

Current payments (payment + 1945 extra each month) feels like the right amount for my goals and circumstances and will let me meet my goal to pay the house off in 15 years instead of 30.   But when I see other people's progress, I really want to accelerate.  Unfortunately, that is not in sync with my Investment Policy & Asset Allocation goals. 

It's just so much more gratifying to see this number shrink! 

runewell

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Re: Mortgage Payoff Club!!
« Reply #1202 on: April 28, 2017, 11:54:33 AM »
1. Being debt free trumps the math for me.  The math leans to invest, but I'd rather be debt free.

So how much did you lose by not investing instead? 

3.  Tax Deduction - This may have been stated on the thread already, but the tax deduction of a mortgage is not as beneficial as it's purported to be if you are making the "do I pay it down" decision.  If you are considering prepaying your mortgage, you are most likely going to be doing this with after-tax dollars (i.e. non-IRA/401k dollars).  If you don't prepay the mortgage and opt to invest those dollars, you are indeed getting a tax deduction for the mortgage interest.  But assuming you are investing the dollars that would go to mortgage prepayment into an after-tax account (my scenario since I'm maxing my 401k), then you will be taxed on any dividends/interest/capital gains realized from that investment.  So by not paying down the mortgage you are preserving the tax deduction but at the same time adding taxable investment income.  While you do have a limited amount of control over how those earnings are taxed, you are still generating incremental tax on those dollars when they are invested.  So the benefit of the mortgage interest deduction is muted, especially for my scenario.

I'm not sure that makes any sense at all.
The long-term capital gains tax rate is 0% for someone who has a 15% ordinary income tax rate.  So you did lose a tax deduction but aren't necessarily paying more taxes is you are prudent.


runewell

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Re: Mortgage Payoff Club!!
« Reply #1203 on: April 28, 2017, 11:55:44 AM »
Still making steady progress. I too am looking forward to having more flexible cash flow in the not too distant future.

If you are paying down the mortgage that quickly, you really don't need "more flexible" cash flow. 

Virtus

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Re: Mortgage Payoff Club!!
« Reply #1204 on: April 28, 2017, 01:31:13 PM »
Still making steady progress. I too am looking forward to having more flexible cash flow in the not too distant future.

If you are paying down the mortgage that quickly, you really don't need "more flexible" cash flow.

This guy is like a vegetarian going to a steak house  to argue over if eating meat is wrong.

There are plenty of other posts (a few below) if you want to argue about whether to pay the mortgage off early or not. This, however, is not one of those threads.

https://forum.mrmoneymustache.com/welcome-to-the-forum/mr-math-and-paying-off-your-mortgage/?topicseen

SAfAmBrit

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Re: Mortgage Payoff Club!!
« Reply #1205 on: April 29, 2017, 09:48:52 AM »
Still making steady progress. I too am looking forward to having more flexible cash flow in the not too distant future.

If you are paying down the mortgage that quickly, you really don't need "more flexible" cash flow.

This guy is like a vegetarian going to a steak house  to argue over if eating meat is wrong.

There are plenty of other posts (a few below) if you want to argue about whether to pay the mortgage off early or not. This, however, is not one of those threads.

https://forum.mrmoneymustache.com/welcome-to-the-forum/mr-math-and-paying-off-your-mortgage/?topicseen

I agree! Maybe he thinks we are idiots just randomly just throwing money at our money at our house without a thought and is trying to save us from ourselves? I am vegetarian.......  Jetfuel!!!

runewell

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Re: Mortgage Payoff Club!!
« Reply #1206 on: May 01, 2017, 07:07:15 AM »
I agree! Maybe he thinks we are idiots

People on this forum will say just about anything to justify what they want to do. 

"The math trumps paying down my house, but I'm going to pay down my house anyway!"
Why shouldn't I ask how costly of a decision that is?  I suppose the reason I shouldn't ask it is maybe I wouldn't trust anyone to come up with a good estimate. 

In the last 5 years the SPY offered an 11.7% rate of return plus dividends that would have pushed the number up to at least 13%.  Anyone who spent five years throwing $1,000/mo at a 4% mortgage instead of investing it lost out on $16,700 of wealth.

Rowellen

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Re: Mortgage Payoff Club!!
« Reply #1207 on: May 01, 2017, 08:11:05 AM »
I'm hoping to have my mortgage paid off in 2 to 3 years. Currently the balance is $151,412.
We're planning to sell an underperforming investment property within the next couple of months to get the balance under 100k. After that it will be a slow slog to the end.

Reducing expenses is a higher priority than investment for us at the moment due to the uncertainty of DH's work and the need for me to change jobs asap that will likely result in a pay cut.

BlueHouse

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Re: Mortgage Payoff Club!!
« Reply #1208 on: May 01, 2017, 12:02:35 PM »
I agree! Maybe he thinks we are idiots

People on this forum will say just about anything to justify what they want to do. 
Why shouldn't I ask how costly of a decision that is?

Because you've entered an ongoing celebration for like-minded people who want the support and encouragement of other like-minded folks, and instead of offering a positive attitude, you're telling other adults that their decisions are stupid for no reason other than to hear yourself talk and to "win at the internet".  This isn't the appropriate place.

How about you pick another topic that exists for debate and go visit THAT group for a while? 

pdxmonkey

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Re: Mortgage Payoff Club!!
« Reply #1209 on: May 01, 2017, 02:18:47 PM »
I agree! Maybe he thinks we are idiots

People on this forum will say just about anything to justify what they want to do. 
Why shouldn't I ask how costly of a decision that is?

Because you've entered an ongoing celebration for like-minded people who want the support and encouragement of other like-minded folks, and instead of offering a positive attitude, you're telling other adults that their decisions are stupid for no reason other than to hear yourself talk and to "win at the internet".  This isn't the appropriate place.

How about you pick another topic that exists for debate and go visit THAT group for a while?

The poster is clearly a tool who hasn't read the entire thread. Do you think he tells people who user bonds or treasuries to diversify their portfolio the same thing? Paying your mortgage is not dis similar to purchasing a bond. If you have a sufficient amount going into equities already... And you want to have a person of your money go to something lower risk with a lower return paying the mortgage early is one option for that. I already have something like 60-70% of my post tax income going into equities. I really don't need all of it to go there

farmecologist

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Re: Mortgage Payoff Club!!
« Reply #1210 on: May 01, 2017, 03:07:50 PM »
I agree! Maybe he thinks we are idiots

People on this forum will say just about anything to justify what they want to do. 
Why shouldn't I ask how costly of a decision that is?

Because you've entered an ongoing celebration for like-minded people who want the support and encouragement of other like-minded folks, and instead of offering a positive attitude, you're telling other adults that their decisions are stupid for no reason other than to hear yourself talk and to "win at the internet".  This isn't the appropriate place.

How about you pick another topic that exists for debate and go visit THAT group for a while?

The poster is clearly a tool who hasn't read the entire thread. Do you think he tells people who user bonds or treasuries to diversify their portfolio the same thing? Paying your mortgage is not dis similar to purchasing a bond. If you have a sufficient amount going into equities already... And you want to have a person of your money go to something lower risk with a lower return paying the mortgage early is one option for that. I already have something like 60-70% of my post tax income going into equities. I really don't need all of it to go there

Just a reminder...but if someone wants to hang out with the "anti-pay-off-your-mortage" crowd..there is a thread for that too!

    https://forum.mrmoneymustache.com/throw-down-the-gauntlet/dont-payoff-your-mortgage-club/



runewell

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Re: Mortgage Payoff Club!!
« Reply #1211 on: May 02, 2017, 06:35:36 AM »
Quote
Because you've entered an ongoing celebration for like-minded people who want the support and encouragement of other like-minded folks, and instead of offering a positive attitude, you're telling other adults that their decisions are stupid for no reason other than to hear yourself talk and to "win at the internet".  This isn't the appropriate place.

It's the perfect place for that reason, because some people should probably be lamenting their decision, not celebrating it.
I'm all for asset allocation and when my 15-yr mortgage is paid off in my late 50's I won't have any plans to remortgage or anything.
But when people say that being debt-free is more important than the math, I assume that they haven't done the math - and I wouldn't be surprised if many people were incapable of doing the math.  And I think it's important to say something because the failure to retain low-interest-rate auto and home loans is a real wealth killer around here.


theadvicist

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Re: Mortgage Payoff Club!!
« Reply #1212 on: May 02, 2017, 07:36:22 AM »
Quote
Because you've entered an ongoing celebration for like-minded people who want the support and encouragement of other like-minded folks, and instead of offering a positive attitude, you're telling other adults that their decisions are stupid for no reason other than to hear yourself talk and to "win at the internet".  This isn't the appropriate place.

It's the perfect place for that reason, because some people should probably be lamenting their decision, not celebrating it.
I'm all for asset allocation and when my 15-yr mortgage is paid off in my late 50's I won't have any plans to remortgage or anything.
But when people say that being debt-free is more important than the math, I assume that they haven't done the math - and I wouldn't be surprised if many people were incapable of doing the math.  And I think it's important to say something because the failure to retain low-interest-rate auto and home loans is a real wealth killer around here.

I think it's important to say something when people are being rude. Runewell, I am sure you are trying to help, but you are being rude. It's like you a butting in on a conversation to correct people, but you weren't in the conversation to start with. Yes, this is an open forum, anyone can comment, etc etc. But why not just be nice? Claiming people are 'incapable of maths' when you have already been politely told a couple of times that this thread is intended for celebrations seems very mean spirited to me.

BlueHouse

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Re: Mortgage Payoff Club!!
« Reply #1213 on: May 02, 2017, 08:59:25 AM »
Quote
Because you've entered an ongoing celebration for like-minded people who want the support and encouragement of other like-minded folks, and instead of offering a positive attitude, you're telling other adults that their decisions are stupid for no reason other than to hear yourself talk and to "win at the internet".  This isn't the appropriate place.

It's the perfect place for that reason, because some people should probably be lamenting their decision, not celebrating it.
I'm all for asset allocation and when my 15-yr mortgage is paid off in my late 50's I won't have any plans to remortgage or anything.
But when people say that being debt-free is more important than the math, I assume that they haven't done the math - and I wouldn't be surprised if many people were incapable of doing the math.  And I think it's important to say something because the failure to retain low-interest-rate auto and home loans is a real wealth killer around here.


Now that I know your circumstances, perhaps you need to realize that you have NO IDEA of the circumstances of the other people here.  For instance, many of us have a goal of paying off a 30-year mortgage within 15 years -- the same as you!  But we may need more flexibility in the payment schedule.  So we call it paying off early.  There is literally no difference, other than we may pay a slightly higher interest rate in return for flexibility. 

Anyway, I don't want to argue as this is a space for celebration and encouragement and really no debate is necessary as the title of the thread says it all -- we've already decided a course of action that is appropriate for our circumstances, so no comment from you is necessary or desired. 

runewell

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Re: Mortgage Payoff Club!!
« Reply #1214 on: May 02, 2017, 11:22:02 AM »

Anyway, I don't want to argue as this is a space for celebration and encouragement and really no debate is necessary as the title of the thread says it all

If you go back and read the original first page of this thread, you'll see there is a lot more to this thread than just celebration.  If this thread has turned into complete celebration, that means there probably aren't enough of us discouraging the accelerated paydown of a mortgage.   

runewell

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Re: Mortgage Payoff Club!!
« Reply #1215 on: May 02, 2017, 11:32:00 AM »

Now that I know your circumstances, perhaps you need to realize that you have NO IDEA of the circumstances of the other people here.  For instance, many of us have a goal of paying off a 30-year mortgage within 15 years -- the same as you!  But we may need more flexibility in the payment schedule.  So we call it paying off early.  There is literally no difference, other than we may pay a slightly higher interest rate in return for flexibility. 


This isn't the same as me, I am paying down a 15-yr mortgage in 15 years.  If you need more flexibility in the payment schedule, then perhaps your emergency fund isn't big enough or you have too much house.  Nevertheless the same principle applies: if your 30-yr mortgage is anywhere near 4% or less you will probably come ahead long-term by not paying down your mortgage early and will probably lose out on wealth as a result. 

But you are right, I don't know everyone's circumstances.  A paydown could be sensible from a risk tolerance / asset allocation point of view.  But not knowing individual details, I certainly wouldn't jump to that conclusion.   

pdxmonkey

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Re: Mortgage Payoff Club!!
« Reply #1216 on: May 02, 2017, 05:35:29 PM »
So... why didn't you get a 30 year mortgage and invest the difference in payment with a 15 year mortgage? Clearly you haven't done the math. Nobody should use a 15 year mortgage when a 30 year mortgage is available for just .25% higher. Let's say you took a 100000 15 year at 3.5% instead of 30 at 3.75%. the payment will be 715 instead of 463. If you put the 252 into equities every month with just an 8% return you would have 87,782.98 extra after 15 years. Why are you throwing this away? Compare this to the less than 10000 extra you would have paid in interest and your 15 year loan is clearly a bad decision.

BlueHouse

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Re: Mortgage Payoff Club!!
« Reply #1217 on: May 03, 2017, 10:46:47 AM »
So... why didn't you get a 30 year mortgage and invest the difference in payment with a 15 year mortgage? Clearly you haven't done the math. Nobody should use a 15 year mortgage when a 30 year mortgage is available for just .25% higher. Let's say you took a 100000 15 year at 3.5% instead of 30 at 3.75%. the payment will be 715 instead of 463. If you put the 252 into equities every month with just an 8% return you would have 87,782.98 extra after 15 years. Why are you throwing this away? Compare this to the less than 10000 extra you would have paid in interest and your 15 year loan is clearly a bad decision.
Or better yet, why not an interest-only loan? 

talltexan

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Re: Mortgage Payoff Club!!
« Reply #1218 on: May 03, 2017, 12:03:57 PM »
That 0.25% difference between 30-year and 15-year sounds low. Did you buy down points?

I'd expect a rate difference ofsomething more like 0.6%, perhaps even greater.

DesireeD

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Re: Mortgage Payoff Club!!
« Reply #1219 on: May 03, 2017, 10:12:12 PM »
Paid off our mortgage on the 25th of this month. Still feels like it's not real. That's been our goal for years. I've always told my husband he can't buy things until the mortgage is paid and now that it is, he doesn't want any of that stuff anymore. Mustashian people problems.

theadvicist

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Re: Mortgage Payoff Club!!
« Reply #1220 on: May 04, 2017, 03:02:44 AM »
Paid off our mortgage on the 25th of this month. Still feels like it's not real. That's been our goal for years. I've always told my husband he can't buy things until the mortgage is paid and now that it is, he doesn't want any of that stuff anymore. Mustashian people problems.

Amazing DesireeD, well done!

Rowellen

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Re: Mortgage Payoff Club!!
« Reply #1221 on: May 04, 2017, 04:17:29 AM »
Paid off our mortgage on the 25th of this month. Still feels like it's not real. That's been our goal for years. I've always told my husband he can't buy things until the mortgage is paid and now that it is, he doesn't want any of that stuff anymore. Mustashian people problems.

Congratulations!

runewell

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Re: Mortgage Payoff Club!!
« Reply #1222 on: May 05, 2017, 11:52:43 AM »
So... why didn't you get a 30 year mortgage and invest the difference in payment with a 15 year mortgage? Clearly you haven't done the math. Nobody should use a 15 year mortgage when a 30 year mortgage is available for just .25% higher.

The difference is usually 1/2 or even 3/4 of a pt.  And I will be nearly 60 when the mortgage is paid off, at which time my risk tolerance will be lower than it was four years ago when I started the 15-yr countdown.  I was quite happy to borrow at 2.625% before any tax advantages.

talltexan

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Re: Mortgage Payoff Club!!
« Reply #1223 on: May 08, 2017, 06:58:31 AM »
Didn't Dodd-Frank make negative amortization loans and Option loans illegal?

Asking for a friend.

BlueHouse

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Re: Mortgage Payoff Club!!
« Reply #1224 on: May 08, 2017, 09:32:52 AM »
So... why didn't you get a 30 year mortgage and invest the difference in payment with a 15 year mortgage? Clearly you haven't done the math. Nobody should use a 15 year mortgage when a 30 year mortgage is available for just .25% higher.

The difference is usually 1/2 or even 3/4 of a pt.  And I will be nearly 60 when the mortgage is paid off, at which time my risk tolerance will be lower than it was four years ago when I started the 15-yr countdown.  I was quite happy to borrow at 2.625% before any tax advantages.

OMG, I can't believe I've wasted my time arguing with someone whose strategy is even more conservative than mine!  Runewell, you're not holding your mortgage, you're paying it off early! 

SAfAmBrit

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Re: Mortgage Payoff Club!!
« Reply #1225 on: May 11, 2017, 09:07:13 AM »
Principal paid off so far

2012 - $3415
2013 - $3994
2014 - $8483
2015 - $38412 (yup got rid of all the debt and $10 000 windfall not expected)
2016 - $67650
2017 - $26674

3/1 Remaining balance $87322. Projected pay off date 09/09/2017 - SO 51st birthday.

4/1 Remaining balance $81837

4/30 Remaining balance $76952 (I owed the tax man!)

5/29 Remaining balance $73836

6/30 Remaining balance $65388

7/29 Remaining balance $60825

8/31 Remaining balance $55728

9/30 Remaining balance $49696

10/31 Remaining balance $39920

11/30 Remaining balance $36721

01/05 Remaining balance $34633

01/29 Remaining balance $32965

02/23 Remaining balance $26692

03/29 Remaining Balance $17963

04/27 Remaining balance $12903
 
Jet fuel ever present! I will be in four figures next month - it is unbelievable

5/11 - sorry couldn't wait - needed to share with people who understand - 4 figure party - $9000.

iluvzbeach

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Re: Mortgage Payoff Club!!
« Reply #1226 on: May 11, 2017, 01:11:26 PM »
Woo hoo! Nice work.

Rowellen

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Re: Mortgage Payoff Club!!
« Reply #1227 on: May 11, 2017, 03:24:27 PM »
Fantastic. Great effort!

couponvan

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Re: Mortgage Payoff Club!!
« Reply #1228 on: May 15, 2017, 06:38:51 AM »
Amazing!! You are right on target or ahead of your projections!!

Neustache

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Re: Mortgage Payoff Club!!
« Reply #1229 on: May 15, 2017, 07:24:54 AM »
Have an offer on our rental - for about 20K more than I thought I'd fetch.  Should it sell, will have about 55K to throw at our 83K mortgage on our residence.  Stay tuned...closing date set for 6/16. 

talltexan

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Re: Mortgage Payoff Club!!
« Reply #1230 on: May 15, 2017, 12:42:22 PM »
Neustache-
on your rental, how many months would it have taken to roll up the $20K through just rental profits?

Neustache

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Re: Mortgage Payoff Club!!
« Reply #1231 on: May 15, 2017, 02:28:10 PM »
I have no idea.  LOL.  I became a landlord because when we moved the market was rough in my neighborhood and the realtor thought we'd maybe get 85K for the house.  So 3.5 years later it's selling for 35K more than that (and more importantly, I'm not a landlord anymore).  So as far as profit goes....the profit was in the waiting, but my numbers weren't great as a landlord.  I was renting it for too little because I started off too low (780 a month at the end) but I should have been charging at least 850.  I'm really not sure how to calculate that.  Let's just say I am super happy to be out (if we do in fact close!). 

Rowellen

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Re: Mortgage Payoff Club!!
« Reply #1232 on: May 15, 2017, 02:42:35 PM »
Have an offer on our rental - for about 20K more than I thought I'd fetch.  Should it sell, will have about 55K to throw at our 83K mortgage on our residence.  Stay tuned...closing date set for 6/16.

Since I'm planning to do the same thing, I say sell. My rental is generally cash flow neutral or slightly negative. The capital gain is great though. I could use the equity to pay down my mortgage and save $300 a month in interest. YMMV.

Neustache

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Re: Mortgage Payoff Club!!
« Reply #1233 on: May 15, 2017, 04:14:45 PM »
Oh, it's under contract.  I just used to work at a title company so I know a contract does not equal a sell.  Sorry for the awkward wording!!

Rowellen

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Re: Mortgage Payoff Club!!
« Reply #1234 on: May 15, 2017, 06:56:47 PM »
I see. I read it as a question. Silly me.
In any case, congrats and good luck on the sale.

markbike528CBX

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Re: Mortgage Payoff Club!!
« Reply #1235 on: May 15, 2017, 07:25:30 PM »
Just put in 31% of the small remaining principle balance.   New service agent website for the credit union.  Will check tomorrow to see if things went well.  I've never had a principle-only payment go right the first time, yet.   I don't think anyone can deal with the concept of paying debt off early.

Comar

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Re: Mortgage Payoff Club!!
« Reply #1236 on: May 16, 2017, 02:31:44 AM »
74k left. Finished in the next 3 years if things go as planned.

Neustache

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Re: Mortgage Payoff Club!!
« Reply #1237 on: May 16, 2017, 05:00:49 AM »
Just put in 31% of the small remaining principle balance.   New service agent website for the credit union.  Will check tomorrow to see if things went well.  I've never had a principle-only payment go right the first time, yet.   I don't think anyone can deal with the concept of paying debt off early.

Our credit union did a revamp on their site and now there's not even an option for a principal only payment.  Guess we'll have to go to the bank to make our large payments!

Rowellen

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Re: Mortgage Payoff Club!!
« Reply #1238 on: May 16, 2017, 06:45:55 AM »
What does it go to if it doesn't go to principal? That seems really odd to me as any extra payment I make comes straight off the balance owing. I am in Australia if that makes a difference.

markbike528CBX

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Re: Mortgage Payoff Club!!
« Reply #1239 on: May 16, 2017, 07:36:50 AM »
Rowellen:
The payment some times is applied instead of a monthly payment, which screws up payment schedule
or is applied like a really big monthly payment, with proportional principle and interest
or is screwed up in some other fashion ( details forgotton) that I've had to correct at the bank in person.

BlueHouse

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Re: Mortgage Payoff Club!!
« Reply #1240 on: May 16, 2017, 12:53:00 PM »
What does it go to if it doesn't go to principal? That seems really odd to me as any extra payment I make comes straight off the balance owing. I am in Australia if that makes a difference.
My bank (WF) applies 100% of extra payment to principal -- unless the "extra" exceeds the entire amount of the monthly payment.  Here are examples:

Assume monthly mortgage payment = $2000

ex1:  Pay $2001-$3999.  Bank uses $2000 toward PITI as usual, and uses the extra $1-$1999 toward Principal.
ex2:  Pay $4000.  Bank uses $2000 toward PITI as usual, and uses the extra $2000 toward the following month's payment.  No decrease in interest owed, you've just paid one month in advance.  You either have to NOT pay the next month, or call the bank to get them to correct it.
ex3:  Pay >$4000.  Bank uses $2000 toward PITI as usual, and uses the extra $2000 toward the following month's payment, and uses any amount over $4000 to go to principal.

For whatever reason, there is no way for me to tell my bank that I want ALL extra payments, EVERY time, to go straight to principal.  I have to call to tell them every month.  So I've given up on that.  Now I just pay $3999 automatically and if I want to make an extra payment, I save it up and walk into the bank when it's worth my while to do it. 

runewell

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Re: Mortgage Payoff Club!!
« Reply #1241 on: May 17, 2017, 12:01:24 PM »
What does it go to if it doesn't go to principal? That seems really odd to me as any extra payment I make comes straight off the balance owing. I am in Australia if that makes a difference.
My bank (WF) applies 100% of extra payment to principal -- unless the "extra" exceeds the entire amount of the monthly payment.  Here are examples:

Assume monthly mortgage payment = $2000

ex1:  Pay $2001-$3999.  Bank uses $2000 toward PITI as usual, and uses the extra $1-$1999 toward Principal.
ex2:  Pay $4000.  Bank uses $2000 toward PITI as usual, and uses the extra $2000 toward the following month's payment.  No decrease in interest owed, you've just paid one month in advance.  You either have to NOT pay the next month, or call the bank to get them to correct it.
ex3:  Pay >$4000.  Bank uses $2000 toward PITI as usual, and uses the extra $2000 toward the following month's payment, and uses any amount over $4000 to go to principal.

For whatever reason, there is no way for me to tell my bank that I want ALL extra payments, EVERY time, to go straight to principal.  I have to call to tell them every month.  So I've given up on that.  Now I just pay $3999 automatically and if I want to make an extra payment, I save it up and walk into the bank when it's worth my while to do it.

It sounds like those payments are all going to principal, what you have to do is keep making payments every month rather than relying on the bank to do it for you?

BlueHouse

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Re: Mortgage Payoff Club!!
« Reply #1242 on: May 17, 2017, 01:38:53 PM »
What does it go to if it doesn't go to principal? That seems really odd to me as any extra payment I make comes straight off the balance owing. I am in Australia if that makes a difference.
My bank (WF) applies 100% of extra payment to principal -- unless the "extra" exceeds the entire amount of the monthly payment.  Here are examples:

Assume monthly mortgage payment = $2000

ex1:  Pay $2001-$3999.  Bank uses $2000 toward PITI as usual, and uses the extra $1-$1999 toward Principal.
ex2:  Pay $4000.  Bank uses $2000 toward PITI as usual, and uses the extra $2000 toward the following month's payment.  No decrease in interest owed, you've just paid one month in advance.  You either have to NOT pay the next month, or call the bank to get them to correct it.
ex3:  Pay >$4000.  Bank uses $2000 toward PITI as usual, and uses the extra $2000 toward the following month's payment, and uses any amount over $4000 to go to principal.

For whatever reason, there is no way for me to tell my bank that I want ALL extra payments, EVERY time, to go straight to principal.  I have to call to tell them every month.  So I've given up on that.  Now I just pay $3999 automatically and if I want to make an extra payment, I save it up and walk into the bank when it's worth my while to do it.

It sounds like those payments are all going to principal, what you have to do is keep making payments every month rather than relying on the bank to do it for you?

Not sure I understand your last part.   As for the first part,  in examples #2 & #3, the bank essentially holds $2000 of the money until the following month, and then they apply the second $2000 as $700 to principal, and the rest to interest and escrow.  So I've loaned them $2000 for a month, and there is no interest reduction to me for paying early, because in the bank's eyes, I didn't pay early.
Yes, I make payments every month as is required. 

Indio

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Re: Mortgage Payoff Club!!
« Reply #1243 on: May 17, 2017, 02:58:55 PM »
My mortgage is held by wf too and they don't process it that way for me. When I make an additional principal payment it goes directly toward reducing principal that month. As a result, the following month shows a drop in interest and increase toward paying down the balance.

Rowellen

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Re: Mortgage Payoff Club!!
« Reply #1244 on: May 17, 2017, 04:11:51 PM »
What does it go to if it doesn't go to principal? That seems really odd to me as any extra payment I make comes straight off the balance owing. I am in Australia if that makes a difference.
My bank (WF) applies 100% of extra payment to principal -- unless the "extra" exceeds the entire amount of the monthly payment.  Here are examples:

Assume monthly mortgage payment = $2000

ex1:  Pay $2001-$3999.  Bank uses $2000 toward PITI as usual, and uses the extra $1-$1999 toward Principal.
ex2:  Pay $4000.  Bank uses $2000 toward PITI as usual, and uses the extra $2000 toward the following month's payment.  No decrease in interest owed, you've just paid one month in advance.  You either have to NOT pay the next month, or call the bank to get them to correct it.
ex3:  Pay >$4000.  Bank uses $2000 toward PITI as usual, and uses the extra $2000 toward the following month's payment, and uses any amount over $4000 to go to principal.

For whatever reason, there is no way for me to tell my bank that I want ALL extra payments, EVERY time, to go straight to principal.  I have to call to tell them every month.  So I've given up on that.  Now I just pay $3999 automatically and if I want to make an extra payment, I save it up and walk into the bank when it's worth my while to do it.

That sounds like pure thievery to me.

Kind of confirms my opinion of banks as evil thieving criminal institutions that are unfortunately necessary.

BlueHouse

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Re: Mortgage Payoff Club!!
« Reply #1245 on: May 17, 2017, 04:33:10 PM »
What does it go to if it doesn't go to principal? That seems really odd to me as any extra payment I make comes straight off the balance owing. I am in Australia if that makes a difference.
My bank (WF) applies 100% of extra payment to principal -- unless the "extra" exceeds the entire amount of the monthly payment.  Here are examples:

Assume monthly mortgage payment = $2000

ex1:  Pay $2001-$3999.  Bank uses $2000 toward PITI as usual, and uses the extra $1-$1999 toward Principal.
ex2:  Pay $4000.  Bank uses $2000 toward PITI as usual, and uses the extra $2000 toward the following month's payment.  No decrease in interest owed, you've just paid one month in advance.  You either have to NOT pay the next month, or call the bank to get them to correct it.
ex3:  Pay >$4000.  Bank uses $2000 toward PITI as usual, and uses the extra $2000 toward the following month's payment, and uses any amount over $4000 to go to principal.

For whatever reason, there is no way for me to tell my bank that I want ALL extra payments, EVERY time, to go straight to principal.  I have to call to tell them every month.  So I've given up on that.  Now I just pay $3999 automatically and if I want to make an extra payment, I save it up and walk into the bank when it's worth my while to do it.

That sounds like pure thievery to me.

Kind of confirms my opinion of banks as evil thieving criminal institutions that are unfortunately necessary.
Well, to be fair, they will adjust it if I call and ask them to.  And now that I understand how WF does it, I can follow the rules.  It's a pain, but think of it like any financial tool -- learn the rules and then learn how to navigate the system.  It does suck that the default stance of banks is to make things more difficult for their customers.  It seems as if most of the financial world is set up stop that there are only winners and losers and there are rarely win-win situations.  :(

KBecks

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Re: Mortgage Payoff Club!!
« Reply #1246 on: May 18, 2017, 07:47:50 AM »
Our mortgage holder is the same as example #2, but, if I pay by check on the monthly statement, I can designate additional principal, just then -- once a month.  So I've gone to paper payments.  I haven't figured out how to make a larger payment automatically.

But this works, and since we're hacking away at the principal at a pretty steady pace,  it will only be another year or so of goofing around with it!

cheddarpie

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Re: Mortgage Payoff Club!!
« Reply #1247 on: May 18, 2017, 08:00:33 AM »
My bank also defaults extra payments to be "early payments" (of P&I) instead of just additional principal -- you have to be careful to specify any extra payments are principal only.

In the meantime, I'm down to $5k ...! If I just do the regular automatic payments it will be done by the 5-year anniversary of the loan (my original goal) in the fall. But there's a good chance I'll just knock it out for my birthday in June. Woohoo!

And congrats to everyone else who's making such great progress!

runewell

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Re: Mortgage Payoff Club!!
« Reply #1248 on: May 18, 2017, 10:42:41 AM »
My bank also defaults extra payments to be "early payments" (of P&I) instead of just additional principal -- you have to be careful to specify any extra payments are principal only.

In the meantime, I'm down to $5k ...! If I just do the regular automatic payments it will be done by the 5-year anniversary of the loan (my original goal) in the fall. But there's a good chance I'll just knock it out for my birthday in June. Woohoo!

And congrats to everyone else who's making such great progress!

What is your interest rate?  And what do you plan to do once the mortgage is paid off?

KBecks

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Re: Mortgage Payoff Club!!
« Reply #1249 on: May 20, 2017, 12:36:21 PM »
Principal $65,500
Principal Payments $5,800
New Balance (June 2017)  $59,700

I really waffled on whether to keep whacking at it, but we will stick with the original idea and target the final payoff a little less than a year.