Mortgage Payoff Club!!

[AnswerIs42]

Thanks so much for the kind words, they are much appreciated. I checked the mortgage site over the weekend and loved seeing "Paid In Full."

Alright!

[Rowellen]

Thanks so much for the kind words, they are much appreciated. I checked the mortgage site over the weekend and loved seeing "Paid In Full."

I said to my DH this morning "Hey, we're the people with the paid off house!"

Love it. You rock! Very inspiring.

[theadvicist]

Made our last payment in the 80Ks, balance now £80,256. Next payment will take us into the 70s, yay!

[pdxmonkey]

Down to one million two hundred thirty thousand cents.

[Neustache]

Our rental house sold and the check has been deposited.  Not actually putting it all down at once, but the amount in our bank vs. our mortgage balance is now at 58K vs. 83K.  25K to go!

[couponvan]

Our rental house sold and the check has been deposited.  Not actually putting it all down at once, but the amount in our bank vs. our mortgage balance is now at 58K vs. 83K.  25K to go!

Woohoo!!!! Congratulations- you are almost free!!!

[SAfAmBrit]

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 - $36000

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
 
05/26 Remaining balance $5700

06/22/2017 Remaining balance $0

Oh my goodness - it is done = it is paid off. Thank-you to everyone - especially assauer - who has encouraged me over the last few years. Waiting to see the $0 paid off in full to show.

[iluvzbeach]

Huge congrats, SAfAmBrit. We did the same earlier this month so I'm pretty certain we understand your joy at having paid it off. PIF is my new favorite acronym. It will feel a bit surreal for a while, I'm sure. Congrats again.

[Rowellen]

Congrats  SAfAmBrit. Looks like you beat your target date by several months. Well done.

[justaguy]

Congratulations SAfAmBrit - very inspiring! 

[FireLane]

As of today, I'm down to $60k left. I could pay it off this year if I got really aggressive, but I'm trying to divide my paychecks between that and putting money into Vanguard. Aiming to be mortgage-free by 2018!

Progress update: My September payment has cleared and I'm down to $51K. The end is in sight!

Down to $38K as of February. I'm getting impatient to be done with this now that the amount left is so small. :)

$28K remaining. At the rate I'm paying it down, I have less than a year left. The light at the end of the tunnel!

[Money Badger]

Reclaimed $600 for stuff on Craigslist that all just went to principal and that now pays us back $3 a month so as of 9/1, we'll be down to $106,750.    So without raiding the stash, need to find another $5,500 to get to 5 digits by year end.   Have a plan for 4K of it so far...

Lots of goodness lately on the payoffs/paydowns...     Progress was slower than hoped after paying 2 semesters of college expenses the last 5 months plus annual 529 contributions instead of the mortgage...   Didn't make the 5-digit club, but feeling good about paying down to $105K.

Keeping on, keeping on...  Down to a bit over 101K after most recent payment.   The bad news is the 5 digit club is being delayed by college expenses and home maintenance costs... the good news is we will sell and downsize in the spring!   Gonna get this sucka paid-off one way or t'other!

[Alfred J Quack]

Alrighty, we're down to 12K. Had a few financial setbacks as well as some unmustachian purchases (new 2nd hand car, curtains fell apart etc.). Goal was to finish up the mortgage this year which won't be doable but we'll probably finish up around 8 or 9k at the end of the year :)
So, we're aiming for next year! Current montly mortgage was € 85 before the last update so we'll end up paying around € 55-60  per month :D

[Neustache]

Our rental house sold and the check has been deposited.  Not actually putting it all down at once, but the amount in our bank vs. our mortgage balance is now at 58K vs. 83K.  25K to go!

Woohoo!!!! Congratulations- you are almost free!!!

I know!  So close.  When I sell my extra car I should be about 6K closer!

[talltexan]

is anyone on this thread taking the approach of stuffing all the money he/she can into an SP500 fund, and then--when the balance is equal to the mortgage--selling to pay off the mortgage?

[Indio]

I have been an observer and cheerleader of this thread for a few years, but this week I officially ended my mortgage. I wish I could say it was exceptionally early, but it wasn't. It involved 3 refinances, 1 recast in Sept 2016, 1 consolidation of HELOC (needed for divorce) into 1 of those refinances in June 2013. I was throwing $500 here and and $1000 there monthly at the mortgage over time, but the big impact didn't happen until I switched jobs in June 2015. Took the big leap after 21 yrs at "ideal" job and it led to a 45% bump in salary. Every month I was now able to put more toward payoff and the balance declined quickly. When my options vested at new company, due to buyout, I put that money toward mortgage. When bond payout happened, I put that money toward mortgage. Had ESPP from previous company and that stock started to move upward with the recent market growth. Once that stock reached a point where I had enough to payoff mortgage and associated long term capital gains taxes, I decided to sell it and close out the mortgage. Fully recognize that was a conservative move, but still have plenty of investments in stock market.

In June 2015, when I started new job, the mortgage was $205,000. Today it is $0. I notified the town about property taxes and I notified by insurance company. Once I get the final title transfer and recorded by the county, the mortgage will be a piece of history. Logging into mint, I keep checking the debt trend report because it's such eye candy to see that the debt shackles are officially gone.

A little aside that I learned about property taxes when speaking to the town, is that the bank didn't pay the taxes until end of month it was due, even though they pulled the escrow funds out of my account on July 1st. They hung on to the funds without paying me interest and not paying the town right away.

While the mortgage was a priority, it was secondary to maxing out 401K, IRA, family HSA, and kids Roth IRAs (which are their college funds). It is a great feeling to know that no matter what happens now, I only need to worry about paying property taxes and insurance on our home. I'm suffering from "one more year" syndrome before I decide to fully FIRE.

I don't smell the jet fuel or the barn any more but I'm still going to cheer all of you on.

[Neustache]

Congrats, Indio!!

[iluvzbeach]

Congrats, Indio. Really enjoyed reading your story and the determination you had to make it happen.

It really is a great feeling, isn't it?

[SwordGuy]

is anyone on this thread taking the approach of stuffing all the money he/she can into an SP500 fund, and then--when the balance is equal to the mortgage--selling to pay off the mortgage?

That's a great plan as long as you can wait a few years longer than you wanted, in case the market is down big time for a few years.  Go for it!

Or just use it to pay the  mortgage payments and continue to make more in earnings than you are paying in interest. :)

[BlueHouse]

is anyone on this thread taking the approach of stuffing all the money he/she can into an SP500 fund, and then--when the balance is equal to the mortgage--selling to pay off the mortgage?

Yes I did this (partial).  I was informed that this is called a "sinking fund".   I had one account earmarked just for this purpose and two years ago took out $100k and paid down my mortgage just prior to a re-cast (but didn't pay it all off).  Fast-forward a few years, and I have enough money in my accounts to pay off both of my properties.  I don't pay them off because I like watching the investment account grow more than I want to see the loan drop.  The investment account has been growing at a faster rate, which is expected over the long run, but not always in the short-term.   

[Indio]

Congrats, Indio. Really enjoyed reading your story and the determination you had to make it happen.

It really is a great feeling, isn't it?

Why, yes, it absolutely, fantastically does feel good. Your post a few weeks ago and the 4th of July were my inspiration. Was listening to Hamilton soundtrack and decided that I was going to break the tyranny of debt by this holiday. LOL.

[Rowellen]

I have been an observer and cheerleader of this thread for a few years, but this week I officially ended my mortgage. I wish I could say it was exceptionally early, but it wasn't. It involved 3 refinances, 1 recast in Sept 2016, 1 consolidation of HELOC (needed for divorce) into 1 of those refinances in June 2013. I was throwing $500 here and and $1000 there monthly at the mortgage over time, but the big impact didn't happen until I switched jobs in June 2015. Took the big leap after 21 yrs at "ideal" job and it led to a 45% bump in salary. Every month I was now able to put more toward payoff and the balance declined quickly. When my options vested at new company, due to buyout, I put that money toward mortgage. When bond payout happened, I put that money toward mortgage. Had ESPP from previous company and that stock started to move upward with the recent market growth. Once that stock reached a point where I had enough to payoff mortgage and associated long term capital gains taxes, I decided to sell it and close out the mortgage. Fully recognize that was a conservative move, but still have plenty of investments in stock market.

In June 2015, when I started new job, the mortgage was $205,000. Today it is $0. I notified the town about property taxes and I notified by insurance company. Once I get the final title transfer and recorded by the county, the mortgage will be a piece of history. Logging into mint, I keep checking the debt trend report because it's such eye candy to see that the debt shackles are officially gone.

A little aside that I learned about property taxes when speaking to the town, is that the bank didn't pay the taxes until end of month it was due, even though they pulled the escrow funds out of my account on July 1st. They hung on to the funds without paying me interest and not paying the town right away.

While the mortgage was a priority, it was secondary to maxing out 401K, IRA, family HSA, and kids Roth IRAs (which are their college funds). It is a great feeling to know that no matter what happens now, I only need to worry about paying property taxes and insurance on our home. I'm suffering from "one more year" syndrome before I decide to fully FIRE.

I don't smell the jet fuel or the barn any more but I'm still going to cheer all of you on.

Congrats!

Bloody thieving banks. Unfortunately a necessary evil.

[Rowellen]

June 16 $200,813

Apr 17 $151,412
May 17 $144,681
June 17 $139,075

Loving these numbers.  Rental is going on the market next week.

[birdman2003]

Congratulations Indio

[Neustache]

Gonna start this back up again.  Current goal is to get to 90K by the end of 2016. 

Starting Mtg Sept 2013:  $123,500

Today (July 5th):  $98,504


It's fun to be back on this thread again!

8/1/2016:  $95,504

1/7/2016 $84,969.68

Not bad...still have to fill up DH's 2016 IRA but I can do that in March as it's a three paycheck month...cutting it close, I know.

Been throwing cash from the sale of my rental at my mortgage so it's time for an update:

$33,021.54

Hope to have that sucker gone by the end of 2017.  I have about 20K in my checking/savings leftover from the sale of the rental and so I'll slowly whittle that down plus add in about 3K per month from our paychecks. 

[frizzywhiskers]

Second Quarter 2017 Update:

Starting mortgage = $435,000, 5 year term @ 3.26% (starting Sept. 30, 2013)
Goal = Full Mortgage Payoff by end of 5 year term (Sept. 30, 2018)

Progress:
- Mortgage amount as of December 25, 2014:  $380,819
- Mortgage amount as of April 2, 2015: $359,144
- Mortgage amount as of July 9, 2015: $324,055
- Mortgage amount as of December 31, 2015:  $285,708
- Mortgage amount - June 2, 2016 - $253,560
- Mortgage amount - September 8, 2016 - $232,502
- Mortgage amount - December 30, 2016 - $194,252
- Mortgage amount - March 30, 2017 - $161,932
- Mortgage amount - July 16, 2017 - $137,809

Getting closer :)

[Money Badger]

@Frizzywhiskers...   $250K in less than 3 years is simply KILLING IT.

End of July indentured update... Sold some stuff on craigslist and chipped in to principal a full 1% this month to just over 100K.   The 5 digit club is squarely in my gunsights!

[frizzywhiskers]

@Frizzywhiskers...   $250K in less than 3 years is simply KILLING IT.

End of July indentured update... Sold some stuff on craigslist and chipped in to principal a full 1% this month to just over 100K.   The 5 digit club is squarely in my gunsights!

Thanks - it's the mission for sure! :-)  Nice work getting so close to the 5 digit club - keep on keeping on, I hope to join you there by the end of this year!

[iluvzbeach]

I was looking on citi's website for info on payoff requests and I see there is mention about some fee included in the payoff amount.  It wasn't clear what that is - is it a county recording fee?  Should be very cheap (maybe $50), right?  Any other fees I should expect?

Is it better to request a payoff and pay that amount or just send in most of it and make regular payments to kill the last few thousand?

bender, do whatever makes you most comfortable. There is no right or wrong or best way, IMO.

We received the original Note for our mortgage in the mail last week with a big red PAID stamp on it. Best feeling ever. Still a bit surreal, but we are starting to grasp the magnitude of the accomplishment. I read a link that arebelspy posted about retirement inevibility (I forget the exact phrase) and I realized we are there. Can't wait to actually FIRE.

[Harper]

Hi!  New to this thread.  Would love to pay off the mortgage by end of 2018.  Can anyone point me to a great calculator for paying down the mortgage?  I've found a few but they don't seem quite right.

Started at 220K 3 years ago.  We are at 111K now.

It's a psychological thing for us.  We are also investing, blah blah blah but this is important.

Everyone here is doing great!!!

[ender]

Bloody thieving banks. Unfortunately a necessary evil.

We asked when we got our mortgage if we could not do escrow and the bank let us.

So, we pay our taxes when we want to and don't have to worry about the bank screwing up escrow ;-)

[Rowellen]

June 16 $200,813

Apr 17 $151,412
May 17 $144,681
June 17 $139,075
July 17 $136,332

[K-ice]

So I have been playing around with some mortgage HELOC calculations.

Our mortgage on our rental property in actually in a Line of Credit that we use as a checking account.
As the rent checks come in they go straight towards paying down the HELOC.

I can't find the exact article that helped persuade me to drop the mortgage and get a full HELOC but this one is close.

http://www.claytonmorris.com/blog/2015/7/20/how-to-pay-off-your-house-within-5-years-using-these-awesome-ninja-tricks


I was curious to compare 3 options.  Mortgage, LOC, LOC + extra

We have also been making some seriously large extra payments

                    MORTGAGE   HELOC        HELOC + extra
March 2016   $320,600     $320,600      $320,600
July 2016       $317,000    $314,000      $314,000
November 2016  $313,000   $306,000   $306,000
March 2017    $309,000      $299,000    $218,000  (Made some huge extra pmts)
July 2017       $305,000     $295,000     $213,000

So If we had been following a regular mortgage we would still owe $305,000. 
The HELOC method saved $10,000 without really even trying.

Coupled with the extra payments, one of which was basically putting all my emergency fund against the HELOC, and we are down to $213,000.

Anyway, if you are not already using some HELOC tricks to help pay your mortgage faster you may what to add that technique. 

[firescape]

So I have been playing around with some mortgage HELOC calculations.

Our mortgage on our rental property in actually in a Line of Credit that we use as a checking account.
As the rent checks come in they go straight towards paying down the HELOC.

I can't find the exact article that helped persuade me to drop the mortgage and get a full HELOC but this one is close.

http://www.claytonmorris.com/blog/2015/7/20/how-to-pay-off-your-house-within-5-years-using-these-awesome-ninja-tricks


I was curious to compare 3 options.  Mortgage, LOC, LOC + extra

We have also been making some seriously large extra payments

                    MORTGAGE   HELOC        HELOC + extra
March 2016   $320,600     $320,600      $320,600
July 2016       $317,000    $314,000      $314,000
November 2016  $313,000   $306,000   $306,000
March 2017    $309,000      $299,000    $218,000  (Made some huge extra pmts)
July 2017       $305,000     $295,000     $213,000

So If we had been following a regular mortgage we would still owe $305,000. 
The HELOC method saved $10,000 without really even trying.

Coupled with the extra payments, one of which was basically putting all my emergency fund against the HELOC, and we are down to $213,000.

Anyway, if you are not already using some HELOC tricks to help pay your mortgage faster you may what to add that technique.

Not sure I understand. I read the article you mentioned but maybe you could expand on where the actual savings occur.
With the HELOC method are you actually saving interest on you home mortgage? Or are you just more disciplined when having the HELOC balance up high, and having more of your income go to paying off the home loan?

Thanks.

[K-ice]

Sorry, I'll try & explain more.

Yes I am actually saving interest. You do need to be disciplined but I find it very automatic because rent goes in and only taxes & insurance come automatically out.

Here is the original pod cast I heard.

https://www.listenmoneymatters.com/how-to-actually-save-thousands-on-your-mortgage/

A few things are necessary for this to work.

You MUST make more than you spend & NEVER use the HELOC for stupid consumer purchases.
But we did use it to pay the plumber when necessary.

There are a few reasons for the $10,000 savings I saw in about 18 months.

First, my HELOC interest rate was a bit lower. 3.2% vs 3.5%.

Next the big thing is that every rent check went directly against the mortgage at the beginning of the month. This timing helps save.

The total rents were more than the standard mortgage payments were, so automatically a little bit more was being paid every month.

Finally, this property used to have its own checking account where we maintained a $2500 balance & there was sometimes the odd fee. My HELOC has no fees and that checking account was closed so we could throw another $2500 at the HELOC/mortgage.

I've seen the interest payment out of the HELOC drop from over $800 to $600 so now another $200 per month is going to the principal.

All those little things add up and I feel like we are just on autopilot because I no longer need to stash a lump sum payment in a savings account and then transfer it.

I find this really works for us. Has anyone else tried?

[Hadilly]

Phew, just finished reading this entire thread and now feel qualified to jump in. We just made the decision to pay off our mortgage early, going from 28 years to 15. We owe $598k at 3.75%. I know all the maths about investing, but if we stick with the current term, we will pay it off when I am 75! That seems way too old. The sum we owe seems huge to me, but I will focus on making extra payments and whittling away on it with extra cash/side hustle money/ etc.  If the stock market crashes, we'll take the extra money and buy stocks.

We are maxing Roths, 401k, etc., so not forgoing investing in the mean time.

I expect to be participating here for a long long time, but shorter than 28 years!

Congrats to everyone here, your stories are inspiring.

[BlueHouse]

Phew, just finished reading this entire thread and now feel qualified to jump in. We just made the decision to pay off our mortgage early, going from 28 years to 15. We owe $598k at 3.75%. I know all the maths about investing, but if we stick with the current term, we will pay it off when I am 75! That seems way too old. The sum we owe seems huge to me, but I will focus on making extra payments and whittling away on it with extra cash/side hustle money/ etc.  If the stock market crashes, we'll take the extra money and buy stocks.

We are maxing Roths, 401k, etc., so not forgoing investing in the mean time.

I expect to be participating here for a long long time, but shorter than 28 years!

Congrats to everyone here, your stories are inspiring.

Very similar in all aspects to my situation.  Doing same thing here.

[Hadilly]

BlueHouse: glad to know I'm not the only person with an enormous mortgage!

[firescape]

Thanks K-ice for the information.
I think I understand better now. I looked quickly at HELOC rates in my area and can't find anything close to what my interest rate on mortgage is, 2.75. Most HELOC rates are 4.5 and up. It sounds like the HELOC rate has to be lower than mortgage for this to work.

[K-ice]

Thanks K-ice for the information.
I think I understand better now. I looked quickly at HELOC rates in my area and can't find anything close to what my interest rate on mortgage is, 2.75. Most HELOC rates are 4.5 and up. It sounds like the HELOC rate has to be lower than mortgage for this to work.

Of course the lower the HELOC interest rate the better but actually I tested it with $100,000 borrowed at 2.75% for 30y and a $10,000 HELOC at 4.5% paid off at $1,000/month and it still works.

How? Because the $10,000 immediately changes the mortgage principal to $90,000. And you pay the HELOC off in a very short period of time, not amortized over 30y.

I tested 2 scenarios plugging numbers into this calculator:
https://www.vertex42.com/Calculators/home-mortgage-calculator.html

Option 1,
Regular mortgage $100,000 borrowed at 2.75% for 30y.
The interest paid on the first year in the mortgage is $2723.

Option 2,
 If you can borrow $10,000 from your HELOC and immediately pay it towards your mortgage
The interest paid on the first year in the mortgage is $2468.
You also save a total of  11,430.48 and 4.5years off the life of your mortgage.
Of course you still have a $10,000 HELOC to pay down at 4.5%. So your quick calculation may say this is $450 in interest.  However, remember, your monthly surplus, assuming $1000 goes to pay this off so the total interest is only $211.  Add that to the mortgage interest and $2679 is still < $2723.

It is still surprisingly better even with the different interest rates. Is it worth the hassle when the difference is now less than $100 per year?


When you repeat this process every year, your 30y loan will be paid off in only 7 years-1 month. With a total interest savings of $37,000 compared to no early payments.

Option 3 is also quite good and what many people on this thread are doing.  That is stash the money and pay $10,000 every year at the end of the year.  You will pay off your loan in 8y with a total savings of $35,000.   

So the Numbers are better with the HELOC method even with the mortgage at 2.75% and the HELOC at 4.5%.  It is now a question of psychology.   I am pretty disciplined and had a regular checking account, savings account and my HELOC just sitting there unused for a few years.  But my savings would build up and I hated it not working for me.  I also feel like my HELOC is “hair on fire” debt and I feel I pay it off faster than I would save $10,000.   

As they said in the podcast.  They just started with $5000 and paid that off in a few months. Their income is admittedly high. If it takes you 2 stressful years to pay down the $5000 stay away from the HELOC. However, if you can easily pay back the $5000, rinse and repeat a few times and you will really start to see your HELOC working for you.

[pdxmonkey]

Thanks K-ice for the information.
I think I understand better now. I looked quickly at HELOC rates in my area and can't find anything close to what my interest rate on mortgage is, 2.75. Most HELOC rates are 4.5 and up. It sounds like the HELOC rate has to be lower than mortgage for this to work.

Of course the lower the HELOC interest rate the better but actually I tested it with $100,000 borrowed at 2.75% for 30y and a $10,000 HELOC at 4.5% paid off at $1,000/month and it still works.

How? Because the $10,000 immediately changes the mortgage principal to $90,000. And you pay the HELOC off in a very short period of time, not amortized over 30y.

I tested 2 scenarios plugging numbers into this calculator:
https://www.vertex42.com/Calculators/home-mortgage-calculator.html

Option 1,
Regular mortgage $100,000 borrowed at 2.75% for 30y.
The interest paid on the first year in the mortgage is $2723.

Option 2,
 If you can borrow $10,000 from your HELOC and immediately pay it towards your mortgage
The interest paid on the first year in the mortgage is $2468.
You also save a total of  11,430.48 and 4.5years off the life of your mortgage.
Of course you still have a $10,000 HELOC to pay down at 4.5%. So your quick calculation may say this is $450 in interest.  However, remember, your monthly surplus, assuming $1000 goes to pay this off so the total interest is only $211.  Add that to the mortgage interest and $2679 is still < $2723.

It is still surprisingly better even with the different interest rates. Is it worth the hassle when the difference is now less than $100 per year?


When you repeat this process every year, your 30y loan will be paid off in only 7 years-1 month. With a total interest savings of $37,000 compared to no early payments.

Option 3 is also quite good and what many people on this thread are doing.  That is stash the money and pay $10,000 every year at the end of the year.  You will pay off your loan in 8y with a total savings of $35,000.   

So the Numbers are better with the HELOC method even with the mortgage at 2.75% and the HELOC at 4.5%.  It is now a question of psychology.   I am pretty disciplined and had a regular checking account, savings account and my HELOC just sitting there unused for a few years.  But my savings would build up and I hated it not working for me.  I also feel like my HELOC is “hair on fire” debt and I feel I pay it off faster than I would save $10,000.   

As they said in the podcast.  They just started with $5000 and paid that off in a few months. Their income is admittedly high. If it takes you 2 stressful years to pay down the $5000 stay away from the HELOC. However, if you can easily pay back the $5000, rinse and repeat a few times and you will really start to see your HELOC working for you.

Taking money out on a 4.5% heloc to pay a 2.75% mortgage is dumb. You could just as easily pay the monthly surplus each month on the mortgage without waiting to do an annual lump sum and pay even less interest.

Having a heloc available in case of emergency might be a good idea, you could then stop keeping an emergency fund while keeping the heloc balance at 0 allowing you to put all your money to work pasting the mortgage, but the moment you take out anything from the heloc you are paying more interest until it's back to zero. Only do so in a true emergency. If you can pay it off the next month even your credit card is a better option as if you have a zero monthly balance (and you shouldn't be pre paying mortgage if you don't) you will pay NO interest.

[cheddarpie]

I did it!! Paid off about a month ago. At first a little anti-climactic, but now feels Pretty Darn Good as I just got the official documentation. I came in just under 5 years. My focus now will be building up more of a stash -- and I'm pretty close to FI at this point with rental and side gig income, woohoo!! Still likely many years from retirement because I love my job, but it feels SO GOOD to know the job is not the absolute necessity it once once.

This forum is the only place I've told -- so nice to have a place to celebrate! Thanks for all the support and encouragement over the years. I don't give a flying rat about the maths, freedom is what it's all about!

[frizzywhiskers]

I did it!! Paid off about a month ago. At first a little anti-climactic, but now feels Pretty Darn Good as I just got the official documentation. I came in just under 5 years. My focus now will be building up more of a stash -- and I'm pretty close to FI at this point with rental and side gig income, woohoo!! Still likely many years from retirement because I love my job, but it feels SO GOOD to know the job is not the absolute necessity it once once.

This forum is the only place I've told -- so nice to have a place to celebrate! Thanks for all the support and encouragement over the years. I don't give a flying rat about the maths, freedom is what it's all about!

Congratulations!! Super exciting news!  I am about one year behind you in this journey!

[iluvzbeach]

Congrats, cheddarpie!! Getting that paperwork in the mail sure is an awesome feeling. Relish the moment.

[SAfAmBrit]

I did it!! Paid off about a month ago. At first a little anti-climactic, but now feels Pretty Darn Good as I just got the official documentation. I came in just under 5 years. My focus now will be building up more of a stash -- and I'm pretty close to FI at this point with rental and side gig income, woohoo!! Still likely many years from retirement because I love my job, but it feels SO GOOD to know the job is not the absolute necessity it once once.

This forum is the only place I've told -- so nice to have a place to celebrate! Thanks for all the support and encouragement over the years. I don't give a flying rat about the maths, freedom is what it's all about!

I have to agree it is very anti climatic and I keep thinking I have missed paying something because of the mortgage payment + extra not coming out! I do struggle sometimes when work gets annoying not to walk away because I could technically leave now.

I agree on the freedom too! As long as I want it I have a home - if I don't I can sell. Love it!

[theadvicist]

Congrats Cheddarpie!!

[LittleTree]

To the comment about using your HELOC as an emergency fund I wouldn't recommend it. Remember what happened in 2008 when we got letters from our HELOC banks saying our accounts were being frozen. I learned from that experience to have an emergency fund.

[talltexan]

Thanks K-ice for the information.
I think I understand better now. I looked quickly at HELOC rates in my area and can't find anything close to what my interest rate on mortgage is, 2.75. Most HELOC rates are 4.5 and up. It sounds like the HELOC rate has to be lower than mortgage for this to work.

Of course the lower the HELOC interest rate the better but actually I tested it with $100,000 borrowed at 2.75% for 30y and a $10,000 HELOC at 4.5% paid off at $1,000/month and it still works.

How? Because the $10,000 immediately changes the mortgage principal to $90,000. And you pay the HELOC off in a very short period of time, not amortized over 30y.

I tested 2 scenarios plugging numbers into this calculator:
https://www.vertex42.com/Calculators/home-mortgage-calculator.html

Option 1,
Regular mortgage $100,000 borrowed at 2.75% for 30y.
The interest paid on the first year in the mortgage is $2723.

Option 2,
 If you can borrow $10,000 from your HELOC and immediately pay it towards your mortgage
The interest paid on the first year in the mortgage is $2468.
You also save a total of  11,430.48 and 4.5years off the life of your mortgage.
Of course you still have a $10,000 HELOC to pay down at 4.5%. So your quick calculation may say this is $450 in interest.  However, remember, your monthly surplus, assuming $1000 goes to pay this off so the total interest is only $211.  Add that to the mortgage interest and $2679 is still < $2723.

It is still surprisingly better even with the different interest rates. Is it worth the hassle when the difference is now less than $100 per year?


When you repeat this process every year, your 30y loan will be paid off in only 7 years-1 month. With a total interest savings of $37,000 compared to no early payments.

Option 3 is also quite good and what many people on this thread are doing.  That is stash the money and pay $10,000 every year at the end of the year.  You will pay off your loan in 8y with a total savings of $35,000.   

So the Numbers are better with the HELOC method even with the mortgage at 2.75% and the HELOC at 4.5%.  It is now a question of psychology.   I am pretty disciplined and had a regular checking account, savings account and my HELOC just sitting there unused for a few years.  But my savings would build up and I hated it not working for me.  I also feel like my HELOC is “hair on fire” debt and I feel I pay it off faster than I would save $10,000.   

As they said in the podcast.  They just started with $5000 and paid that off in a few months. Their income is admittedly high. If it takes you 2 stressful years to pay down the $5000 stay away from the HELOC. However, if you can easily pay back the $5000, rinse and repeat a few times and you will really start to see your HELOC working for you.

Taking money out on a 4.5% heloc to pay a 2.75% mortgage is dumb. You could just as easily pay the monthly surplus each month on the mortgage without waiting to do an annual lump sum and pay even less interest.

Having a heloc available in case of emergency might be a good idea, you could then stop keeping an emergency fund while keeping the heloc balance at 0 allowing you to put all your money to work pasting the mortgage, but the moment you take out anything from the heloc you are paying more interest until it's back to zero. Only do so in a true emergency. If you can pay it off the next month even your credit card is a better option as if you have a zero monthly balance (and you shouldn't be pre paying mortgage if you don't) you will pay NO interest.

I think I understand the method as involving using the emergency fund to pay down the mortgage immediately, while having the POTENTIAL to use the HELOC if you need funds at the higher rate. So the spread isn't 1.75%, it's discounted by the chance of needing to use the funds.

If the chance of such an emergency is only 10%/year, then you're really at a spread of just 0.175%, which could easily be covered by the one month lag in interest amortization.

[Money Badger]

End of July indentured update... Sold some stuff on craigslist and chipped in to principal a full 1% this month to just over 100K.   The 5 digit club is squarely in my gunsights!

End of August...  5 digit club at last!   $99.9K.   After trimming recurring bills and shifting some things around, the goal is to pay down 1% or more a month on average from here...

[frizzywhiskers]

End of July indentured update... Sold some stuff on craigslist and chipped in to principal a full 1% this month to just over 100K.   The 5 digit club is squarely in my gunsights!

End of August...  5 digit club at last!   $99.9K.   After trimming recurring bills and shifting some things around, the goal is to pay down 1% or more a month on average from here...

Nice work! :)