Author Topic: Mortgage Payoff Club!!  (Read 246587 times)

Neustache

  • Handlebar Stache
  • *****
  • Posts: 1061
Re: Mortgage Payoff Club!!
« Reply #450 on: August 28, 2015, 07:55:47 AM »
PMI Update. I received wrong information again from the 2nd person. Now they say that I do need to be at 78% since I don't have 24 months of payment history. If I were at 80% and had the 2 years of payment history I'd be fine. So even though I've paid off 10% in just about a year, they really need that extra 2%. I won't have the 5k for a few months so I'm super frustrated. They're basically milking me for a few hundred dollars of PMI. I let them know that when I refinance, there's literally no chance that I'll work with this bank. It shouldn't be this hard to remove PMI.

Well, that's a bummer.  You know, we were right at 2 years of payments when we got to 80% so I have no idea if that was an issue at our bank. 

Debts_of_Despair

  • Bristles
  • ***
  • Posts: 292
  • Location: NY
Re: Mortgage Payoff Club!!
« Reply #451 on: August 29, 2015, 03:06:41 PM »

indentured4now

  • Stubble
  • **
  • Posts: 221
Re: Mortgage Payoff Club!!
« Reply #452 on: August 29, 2015, 03:17:51 PM »
Done...paid it off today!

Hell yeaaaahhhh!!!

indentured4now

  • Stubble
  • **
  • Posts: 221
Re: Mortgage Payoff Club!!
« Reply #453 on: August 29, 2015, 03:22:56 PM »
Chipping away...    Another grand to equity so 238K as of today...    with the recent market drama, was also able to pick up another $250/month in income producing funds at 5+ year market lows...   Accelerating the mortgage payoff!   Once the mortgage is dead, the jump to hyperspace (towards FI) begins!!

eyePod

  • Pencil Stache
  • ****
  • Posts: 963
    • Flipping A Dollar
Re: Mortgage Payoff Club!!
« Reply #454 on: August 31, 2015, 04:13:12 AM »
PMI Update. I received wrong information again from the 2nd person. Now they say that I do need to be at 78% since I don't have 24 months of payment history. If I were at 80% and had the 2 years of payment history I'd be fine. So even though I've paid off 10% in just about a year, they really need that extra 2%. I won't have the 5k for a few months so I'm super frustrated. They're basically milking me for a few hundred dollars of PMI. I let them know that when I refinance, there's literally no chance that I'll work with this bank. It shouldn't be this hard to remove PMI.

Well, that's a bummer.  You know, we were right at 2 years of payments when we got to 80% so I have no idea if that was an issue at our bank.

The plot thickens. Our contract says that we have to have no late payments within 2 years. We don't! It doesn't say "for" to years, so they're misinterpreting it. I'm going to be calling them again today and getting ready to escalate as needed since they're in breach of the contract.
I blog on items flipped for a profit on eBay:
Flipping A Dollar

I made 6.5k in profits in 2015!

Bee21

  • Bristles
  • ***
  • Posts: 276
Re: Mortgage Payoff Club!!
« Reply #455 on: September 02, 2015, 03:44:02 AM »
The balance looks good. I think we can do it by the end of November/early December if we reshuffle money sitting around in various accounts. We are extremely motivated now as it looks like HB’s job is on the line.

PFHC

  • Pencil Stache
  • ****
  • Posts: 653
  • Age: 37
  • Location: Midcoast Maine
  • Busy doing.
Re: Mortgage Payoff Club!!
« Reply #456 on: September 02, 2015, 04:18:10 AM »
C'mon guys.  Let's apply some perspective here. 

It doesn't matter if keeping a mortgage and investing the balance can make you more money over the long haul.  Paying off a mortgage, if that's what someone wants to do, is an awesome accomplishment and deserves praise rather than criticism. 

Save the face punches for people who really need them!  I'm borderline on dishing out a few for being so focused on maximizing returns that we neglect to value and recognize tremendous savings accomplishments.
Now you're talkin.

Neustache

  • Handlebar Stache
  • *****
  • Posts: 1061
Re: Mortgage Payoff Club!!
« Reply #457 on: September 02, 2015, 05:53:34 AM »
 
[/quote]

The plot thickens. Our contract says that we have to have no late payments within 2 years. We don't! It doesn't say "for" to years, so they're misinterpreting it. I'm going to be calling them again today and getting ready to escalate as needed since they're in breach of the contract.
[/quote]

Good luck!  Keep us posted.  I can't recall...how much is your PMI a month?  Ours was $51 so while not life changing, still nice to have gone.

rjbf65

  • 5 O'Clock Shadow
  • *
  • Posts: 67
Re: Mortgage Payoff Club!!
« Reply #458 on: September 04, 2015, 06:53:00 AM »
I'll join.

Started June 2014 at 71k.

It's currently $55k.  Goal is to finish it off by next June.   Have 20k in cash that would finish it off by then.  We are currently investing 15% as well.   Basically doing the Dave Ramsey plan.

Currently down to $51,500.  Hoping to get under $50K a month from today.

Down to $49660.  Was able to throw an extra $1555 at it this time.  Budgeting to be able to throw an extra $2500 next month.

Debts_of_Despair

  • Bristles
  • ***
  • Posts: 292
  • Location: NY
Re: Mortgage Payoff Club!!
« Reply #459 on: September 12, 2015, 08:52:10 AM »
Pay week!  Down to 65.3k.

61k at time of this post.

Now at a little over 50k.  Wife is a teacher and gets a lump sum check at the end of the school year.  Put all of it into mortage.

Right now I'm ahead of schedule.  This is way easier than I thought it would be so far.

46.1k.  Kind of in the doldrums right now with only one paycheck coming in and had some unexpected expenses pop up.  Should be ready to hit it hard in September when wife goes back to work and gets a small raise.  Payoff before the end of the calendar year is not out of the question...

42.6k.  Projecting payoff on 1/30/16.

Nora

  • Stubble
  • **
  • Posts: 164
Re: Mortgage Payoff Club!!
« Reply #460 on: September 14, 2015, 01:51:37 AM »
Down to 140000 but have another 60000 of credit cards on 0% interest balance transfers to pay off at the end.

Mntngoat

  • 5 O'Clock Shadow
  • *
  • Posts: 51
  • Location: Southern California
Re: Mortgage Payoff Club!!
« Reply #461 on: September 16, 2015, 08:37:36 AM »
Being free from payments is the goal. As far as "The only minor benefit I can think of to still hold a mortgage is the write off for mortgage interest paid." - doesn't make sense to pay $10 to the bank to get $3 back from the government.

I'll just be able to stop paying that $10 to the bank and keep my money.

  I agree  no payments is my goal too.    we got a $410K  Mortgage in 2007, with the extra payments and refiing  we are down to  18 years today.   I won't miss the interest write off  when its paid off  I'd rather  not have the payment. As for investing the extra payment instead of paying off early   that a whole nother topic.

ML

seemsright

  • 5 O'Clock Shadow
  • *
  • Posts: 97
Re: Mortgage Payoff Club!!
« Reply #462 on: September 16, 2015, 07:46:05 PM »
Being free from payments is the goal. As far as "The only minor benefit I can think of to still hold a mortgage is the write off for mortgage interest paid." - doesn't make sense to pay $10 to the bank to get $3 back from the government.

I'll just be able to stop paying that $10 to the bank and keep my money.

  I agree  no payments is my goal too.    we got a $410K  Mortgage in 2007, with the extra payments and refiing  we are down to  18 years today.   I won't miss the interest write off  when its paid off  I'd rather  not have the payment. As for investing the extra payment instead of paying off early   that a whole nother topic.

ML

We did the math...If we would have left our mortgage the way it was the day that the bank gave it to us...we would have spent a 100K more than we did. We played the refinance game, and payed extra. I do not believe for a minute that I would have made a 100k by investing the extra payments. If anyone has a idea how to make that kinda cash in 13 years (that is how long it took us to pay off the house) then I am all ears.
"Luck is how others define hard work, dedication, focus and vision" 3/15

McGeens

  • 5 O'Clock Shadow
  • *
  • Posts: 18
Re: Mortgage Payoff Club!!
« Reply #463 on: September 17, 2015, 10:28:32 PM »
I'be been onboard with this challenge for four years now. We started with our mortgage in 2008 with $230k owing. When our first child was born in 2011, we went down to one income and a deep desire to get rid of the debt. After contributing to superannuation (Australia), we've been throwing all our extra savings and surpluses into this sucker.

Balance today is $19200, and I CAN'T WAIT to make that final payment !! We're aiming for January 2016 free and clear- what a way to start the new year!! I love reading this thread, there's just no one in real life to discuss this with (we're 33 and 38).

allsummerlong

  • Pencil Stache
  • ****
  • Posts: 573
  • Age: 38
  • Location: British Columbia, Canada
Re: Mortgage Payoff Club!!
« Reply #464 on: September 18, 2015, 08:35:46 AM »
I'be been onboard with this challenge for four years now. We started with our mortgage in 2008 with $230k owing. When our first child was born in 2011, we went down to one income and a deep desire to get rid of the debt. After contributing to superannuation (Australia), we've been throwing all our extra savings and surpluses into this sucker.

Balance today is $19200, and I CAN'T WAIT to make that final payment !! We're aiming for January 2016 free and clear- what a way to start the new year!! I love reading this thread, there's just no one in real life to discuss this with (we're 33 and 38).

Great job!

I could not agree more on the bolded part... I really appreciate the support & stories from this thread :)


Neustache

  • Handlebar Stache
  • *****
  • Posts: 1061
Re: Mortgage Payoff Club!!
« Reply #465 on: September 18, 2015, 10:01:03 AM »
I'be been onboard with this challenge for four years now. We started with our mortgage in 2008 with $230k owing. When our first child was born in 2011, we went down to one income and a deep desire to get rid of the debt. After contributing to superannuation (Australia), we've been throwing all our extra savings and surpluses into this sucker.

Balance today is $19200, and I CAN'T WAIT to make that final payment !! We're aiming for January 2016 free and clear- what a way to start the new year!! I love reading this thread, there's just no one in real life to discuss this with (we're 33 and 38).

Wow!  That's really impressive - maybe when you reach your goal you can give more details on a journal.  :D  Makes my goal of paying off 103K over the next 5 years look pretty sorry.  Ha!

McGeens

  • 5 O'Clock Shadow
  • *
  • Posts: 18
Re: Mortgage Payoff Club!!
« Reply #466 on: September 18, 2015, 10:48:22 PM »
Neustashe, I think it makes your goal maybe seem a bit more achievable. I have lurked on this thread for ages, I find great comfort knowing we're not alone in our quest.

I must say that pumping (almost) everything extra into the mortgage became very boring after a while, especially when unexpected expenses popped up and progress slowed. We celebrated each $10k milestone, but it does sometimes feel like the end will never come. I'm mighty tired of working just to pay off the mortgage! The new year will see us start investing in ETFs or similar, a first for anyone in our families/friend group. Once more we'll seek support from Internet strangers on the same path. I'll update here when it's paid off- it does feel like the finish line is in sight!

Debts_of_Despair

  • Bristles
  • ***
  • Posts: 292
  • Location: NY
Re: Mortgage Payoff Club!!
« Reply #467 on: September 21, 2015, 07:52:14 PM »
I'be been onboard with this challenge for four years now. We started with our mortgage in 2008 with $230k owing. When our first child was born in 2011, we went down to one income and a deep desire to get rid of the debt. After contributing to superannuation (Australia), we've been throwing all our extra savings and surpluses into this sucker.

Balance today is $19200, and I CAN'T WAIT to make that final payment !! We're aiming for January 2016 free and clear- what a way to start the new year!! I love reading this thread, there's just no one in real life to discuss this with (we're 33 and 38).



Great job!

I could not agree more on the bolded part... I really appreciate the support & stories from this thread :)

So true!  The topic of mortgages came up the other day with friends.  I didn't dare mention where I'm at. ☺

Threshkin

  • Pencil Stache
  • ****
  • Posts: 745
  • Location: Colorado
    • My Journal
Re: Mortgage Payoff Club!!
« Reply #468 on: September 22, 2015, 10:11:20 AM »
I'be been onboard with this challenge for four years now. We started with our mortgage in 2008 with $230k owing. When our first child was born in 2011, we went down to one income and a deep desire to get rid of the debt. After contributing to superannuation (Australia), we've been throwing all our extra savings and surpluses into this sucker.

Balance today is $19200, and I CAN'T WAIT to make that final payment !! We're aiming for January 2016 free and clear- what a way to start the new year!! I love reading this thread, there's just no one in real life to discuss this with (we're 33 and 38).



Great job!

I could not agree more on the bolded part... I really appreciate the support & stories from this thread :)

So true!  The topic of mortgages came up the other day with friends.  I didn't dare mention where I'm at. ☺

I hear you on this.  It seems to be a badge of honor to have the biggest mortgage with the most dismal prospects of paying it off.

rjbf65

  • 5 O'Clock Shadow
  • *
  • Posts: 67
Re: Mortgage Payoff Club!!
« Reply #469 on: September 22, 2015, 10:22:54 AM »
I'be been onboard with this challenge for four years now. We started with our mortgage in 2008 with $230k owing. When our first child was born in 2011, we went down to one income and a deep desire to get rid of the debt. After contributing to superannuation (Australia), we've been throwing all our extra savings and surpluses into this sucker.

Balance today is $19200, and I CAN'T WAIT to make that final payment !! We're aiming for January 2016 free and clear- what a way to start the new year!! I love reading this thread, there's just no one in real life to discuss this with (we're 33 and 38).



Great job!

I could not agree more on the bolded part... I really appreciate the support & stories from this thread :)

So true!  The topic of mortgages came up the other day with friends.  I didn't dare mention where I'm at. ☺

I hear you on this.  It seems to be a badge of honor to have the biggest mortgage with the most dismal prospects of paying it off.


My wife and I would like to upgrade in home at some point.. but it's going to be a tough decision to go back into debt to do it.  Maybe we can put it off a few years, but it's going to happen at some point.  I can't wait to pay my current one off.  I'm just a few months away from having a greater amount of cash in the bank versus mortgage balance.  Once that happens, and I have a $10K buffer, I'm pulling the trigger.

K-ice

  • Pencil Stache
  • ****
  • Posts: 644
  • Location: Canada
Re: Mortgage Payoff Club!!
« Reply #470 on: September 22, 2015, 12:24:33 PM »
Here is my mortgage payoff story.  Our mortgage was paid off within the past year. Of course I want to brag, don’t we all ;). But I also want to show what is possible. We were able to do this on a combined income between $85K and $150K depending on the year. In addition to that, one year we cashed out $40K in stocks as a one-time extra payment.  We did very little other savings and focused every extra penny on the mortgage. (Yeah, Yeah invest vs mtg is a whole other debate.) We had a blended mtg HELOC so every payment added to our “squishy debt” fund. This actually gave us more confidence to pay larger lumps.
 
Here is the breakdown starting with $326,500. 25y at 4% pmt about $1700,  max extra lump sums allowed per year $48K

Y1 $326,500   extra pmt $45,000 (Good year at new job)
Y2 $273,500   extra pmt $30,000 (Had a baby.)
Y3 $233,000   extra pmt $0  :(  (Work was unstable. We still stashed some cash.)
Y4 $221,000   extra pmt $48,000  (Yeah! We hit the max lump sum.)
Y5 $160,000   extra pmt $57,500 (This included double down of  $1700 extra for 6 months)

Balance on renewal about $90,000 (We were pissed at the bank and didn’t want to renew.)
“What do you mean you won’t renew, what bank are you transferring to?”

SO now has $45,000 extra
I had $30,000 extra
Argghhhh not quite enough.

I took out a LOC for remaining $15,000  (Mortgage officially paid off but no Champaign yet. SO doing their own dance of joy.)
LOC paid off within 6 months.  (Cork popped!)
Time to pay 5y 6 months

Total interest paid about $45,000 (This still seems like a lot considering how hard we hit the M0F**ing extra payments)
Total interest we would have paid if we took the scheduled 25y  $189,000 

indentured4now

  • Stubble
  • **
  • Posts: 221
Re: Mortgage Payoff Club!!
« Reply #471 on: September 23, 2015, 06:57:36 PM »
Niiiice K-ice!   

Putting an extra grand towards our $238K beast this month after actually getting $400 for a surfboard I'd inherited and saving other shekels so down to $236K...   Mulling over putting a chunk before end of year so your payoff results are tempting me...   


The knitter

  • Stubble
  • **
  • Posts: 115
Re: Mortgage Payoff Club!!
« Reply #472 on: September 26, 2015, 06:28:06 AM »
PMI Update. I received wrong information again from the 2nd person. Now they say that I do need to be at 78% since I don't have 24 months of payment history. If I were at 80% and had the 2 years of payment history I'd be fine. So even though I've paid off 10% in just about a year, they really need that extra 2%. I won't have the 5k for a few months so I'm super frustrated. They're basically milking me for a few hundred dollars of PMI. I let them know that when I refinance, there's literally no chance that I'll work with this bank. It shouldn't be this hard to remove PMI.

Well, that's a bummer.  You know, we were right at 2 years of payments when we got to 80% so I have no idea if that was an issue at our bank.

The plot thickens. Our contract says that we have to have no late payments within 2 years. We don't! It doesn't say "for" to years, so they're misinterpreting it. I'm going to be calling them again today and getting ready to escalate as needed since they're in breach of the contract.

My husband and I bought our home in 2013. We were told PMI at this point no longer automatically comes off at 80% equity. (New rule that says it is with you for the life of the loan, which is outrageous.) Our plan has been to refinance to a new loan. We are a couple weeks away (finishing up a project before our re-assessment).

Is it possible we were misinformed? I'd much rather have the PMI come off by itself. We have a good interest rate now and we are worried we will miss the window before the fed increases the rates.

Neustache

  • Handlebar Stache
  • *****
  • Posts: 1061
Re: Mortgage Payoff Club!!
« Reply #473 on: September 26, 2015, 11:25:03 AM »
The knitter -

FHA loans (to the best of my knowledge) do keep PMI for the life of the loan.  We have a conventional loan.  You might look into refinancing if you have enough equity now and the rate would be better.

The knitter

  • Stubble
  • **
  • Posts: 115
Re: Mortgage Payoff Club!!
« Reply #474 on: September 27, 2015, 09:01:55 PM »
Ah, thanks Neustache. After I posted I did some searching around and saw some articles about conventional loans that allowed for smaller down payments.

We were first time home buyers and didn't know that was an option. We were told our only option was an FHA loan. It may have been true at the time, but we probably should have researched more.

Here's hoping we can refinance before interest rates go up!

mom22boys

  • Stubble
  • **
  • Posts: 180
Re: Mortgage Payoff Club!!
« Reply #475 on: September 28, 2015, 07:32:23 PM »
I just started the refinance ball rolling today. I bought my house less than a year ago, and decided I wanted to move from a 30yr at 4.125 to a 15yr mortgage. Got locked in for 3.375 with only around $400 closing costs (in total). My goal is still to pay it off within 10 years, but I first want to pay off the darn specials.... much higher interest rate... then start plugging extra payments to the mortgage. Just the refinance alone with no extra payments will save me over 22k. Can't wait to get this mortgage gone!

Faraday

  • Handlebar Stache
  • *****
  • Posts: 1200
  • Age: 55
  • Location: NC
  • Solar Powered Slice
Re: Mortgage Payoff Club!!
« Reply #476 on: September 28, 2015, 08:17:46 PM »
I'm in. Why?

- I can "sell" mortgage paydown to DW. I can't "sell" investment vs. paydown in a down equities market.
- I have an obligation to DW in case I'm hit by a bus.
- In the "hit by a bus" scenario, investments have to be managed. A paid off mortgage is clear and simple.
- refi objective in January 2016 will make the house "as cheap as a double wide"
- My timeframe to FIRE is 5 years, not 30 years.
- While I do enjoy buying more value in this down market, I'm using a kind of "blended" approach by paying some against the mortgage. That means my total YTD returns are still beating the S&P while I'm simultaneously lowering risk.
- I'm building in solar hot water heat, solar PV panels, more efficient heat pump and the lot has an almost endless supply of hardwood for burning. That means my home is NOT a fungible asset.

I like the comments above in the thread about relative risk. I got wiped out in Thermo* stocks when the principals set a honeypot and then obliterated the stock value. It wasn't on the scale and visibility of an Enron, but it had a similar effect on me. No one can decide one day your house is worthless - although they can take it from you if it's not paid off free and clear.

FIRE in 2020.

Neustache

  • Handlebar Stache
  • *****
  • Posts: 1061
Re: Mortgage Payoff Club!!
« Reply #477 on: September 29, 2015, 05:52:25 AM »
^ Yep, mefla...that's kind of where we are.  Hubby wants to pay down the mortgage - I've got him talked into doing t. IRA contributions though, to decrease taxes, but after that any extra goes to mortgage pay down.

plainjane

  • Pencil Stache
  • ****
  • Posts: 956
Re: Mortgage Payoff Club!!
« Reply #478 on: September 30, 2015, 07:05:44 AM »
It was painful to wait until 9am to see the numbers flip over this morning, but we're officially below $20k.
Using procrastination to my advantage since 2001.

cheddarpie

  • Stubble
  • **
  • Posts: 209
  • Age: 38
  • Location: Seattle, WA
Re: Mortgage Payoff Club!!
« Reply #479 on: September 30, 2015, 12:06:31 PM »
That way, if the bear comes and takes all my porridge, I can still live comfortably working whatever job I can find and I don't have to worry about living in my car or moving.

This. It's not about maximizing financial gains, it's about peace of mind and almost-guaranteed long-term stability.

I'll have my $250+k mortgage paid off in less than five years from inception. I'm fully funding my retirement accounts and have a hefty emergency fund in the meantime and A-OK missing out on any potential gains (and losses!) in my liquid stash as I work on my mortgage payoff goal. Mortgage first, stash next, then FIRE with no ongoing payment or debt obligations other than utilities and taxes.

Faraday

  • Handlebar Stache
  • *****
  • Posts: 1200
  • Age: 55
  • Location: NC
  • Solar Powered Slice
Re: Mortgage Payoff Club!!
« Reply #480 on: September 30, 2015, 02:08:31 PM »
That way, if the bear comes and takes all my porridge, I can still live comfortably working whatever job I can find and I don't have to worry about living in my car or moving.

This. It's not about maximizing financial gains, it's about peace of mind and almost-guaranteed long-term stability.

I'll have my $250+k mortgage paid off in less than five years from inception. I'm fully funding my retirement accounts and have a hefty emergency fund in the meantime and A-OK missing out on any potential gains (and losses!) in my liquid stash as I work on my mortgage payoff goal. Mortgage first, stash next, then FIRE with no ongoing payment or debt obligations other than utilities and taxes.

cheddarpie, I am doing almost the same thing. I put the stash first and mortgage second, but that's only because I pay the mortgage with post-tax money and stash using the pre-tax sheltering that the 401k's provide. (I have a Roth IRA but the yearly limits on that keep it a distant third.) Like you, I can't wait to get to only utilities and taxes as ongoing financial obligations. If I'm still working, I'll be ramming cash in the stash with prejudice.

Accidental Miser was hilarious and true with that quote. See, that's the crucial thing here: you can lose the house and all you've invested in it if you lose the ability to make the payments via job loss or sickness. What started me on this path is that I projected forward about 15 years and realized we have a high probability of losing the house should we run the mortgage to maturity because the mortgage becomes a cash flow problem in 5 years.

I've seen talk of the mortgage being a great hedge against inflation, but there's no hedge against having the note called by the bank and I KNOW people who've had that experience. (granted, they were consuma suckkas) So a paid-off home is an even more effective hedge against inflation and job loss. While a low interest rate might seem like some kind of wonderful, magic money (and I am getting the lowest I possibly can),  if you lose your job or get sick and can't make the payments, the lowest interest rates in the world aren't gonna help you then.
« Last Edit: September 30, 2015, 02:20:40 PM by mefla »
FIRE in 2020.

cheddarpie

  • Stubble
  • **
  • Posts: 209
  • Age: 38
  • Location: Seattle, WA
Re: Mortgage Payoff Club!!
« Reply #481 on: September 30, 2015, 03:11:00 PM »
I put the stash first and mortgage second, but that's only because I pay the mortgage with post-tax money and stash using the pre-tax sheltering that the 401k's provide. (I have a Roth IRA but the yearly limits on that keep it a distant third.) Like you, I can't wait to get to only utilities and taxes as ongoing financial obligations. If I'm still working, I'll be ramming cash in the stash with prejudice.


Mefla, that's great! I think we're doing the same thing, I just didn't explain it as well ... I also max out my 401k and Roth every year, then focus on mortgage after that. What I call my "stash" is the money to cover the ~30 years between now and when I intend to start drawing on the retirement accounts. There's not much in it yet. :)

Faraday

  • Handlebar Stache
  • *****
  • Posts: 1200
  • Age: 55
  • Location: NC
  • Solar Powered Slice
Re: Mortgage Payoff Club!!
« Reply #482 on: September 30, 2015, 05:22:42 PM »
Mefla, that's great! I think we're doing the same thing, I just didn't explain it as well ... I also max out my 401k and Roth every year, then focus on mortgage after that. What I call my "stash" is the money to cover the ~30 years between now and when I intend to start drawing on the retirement accounts. There's not much in it yet. :)

That's OK if there's not much in the post-tax stash: you're still in your 30's and have plenty of time for it to grow. DW and I are in our 50's so it won't be very long before we can get the 401k money and I expect we aren't going to see any appreciable market-based growth. So Roth is the only post-tax stash I have. 

BTW: that's probably the most crucial fact about why I'm prepaying the mortgage: all the arguments against presuppose floating your money in the stock market for 30 years. We have nowhere near that - I'm just desperately trying to make things happen before our 60's. I believe I have about 5 more "good years" to stash money, so I'm maxing pre-tax and paying the rest against the house.

BTW: I'm eagerly making my 401k contributions in this down market we're having, but the contributions to my "Home Mortgage Bond" give me yields that beat the market. Although my 401k is all S&P 500 Index, my rate of return is about 2% higher due to the positive effect of paying the mortgage.  House is maintaining value, so I'm not losing anything there either.

I'm hoping for very low interest rates in January (they traditionally are very low then) and I'll refi into a 10 year (at least).
FIRE in 2020.

Faraday

  • Handlebar Stache
  • *****
  • Posts: 1200
  • Age: 55
  • Location: NC
  • Solar Powered Slice
Re: Mortgage Payoff Club!!
« Reply #483 on: September 30, 2015, 05:32:20 PM »
"Letting it Ride", A Cautionary Tale

I don't know if anyone here is old enough to remember higher mortgage interest rates, but my last home carried a 30 year mortgage at 5.25% and on the financial advice I had been given at the time, I "let it ride" because it was "good debt". (There was a home equity loan in there too, but that's a story for another day...). We didn't expect to carry the loan to term as we thought we would "upgrade" within five years.

The five year upgrade didn't happen and we were in the house 18 years into a 30 year loan. We got a little appreciation, but I was shocked at how small of a dent we made in the principal: even though the house appreciated, we walked away with only a net profit on the sale of $10k after paying realtor, legal fees and various costs the seller pays. That was a really, really hard lesson to learn and it seemed to make perfect sense until we sold, when we then saw the insanity of it.

I did refinance at one point. (That's how we got to 5.25% - the original loan was higher) In fact, the credit union was glad to "help me save some money" and push the interest rate down a point. Problem is, I didn't shop around - other people were getting better rates and I didn't know you could do such a thing as shop the mortgage. Plus, I got no breaks on the refi and paid the full suite of fees just to do so.

Now, to my credit, I did ask about and check into a 15 year loan. But I followed the advice that I could "turn a 30 into a 15 by paying ahead, and if you needed the cash, you could just stop the double payments".

See the evil here? Prepayments pay both principal and interest, when you should only be paying against the principal. And there wasn't a soul in the world, and certainly not at the credit union, who was gonna tell me that little information gem!

That damned 30 year credit union loan is the biggest reason we got such a late start on our savings toward FI. It made me physically sick to look at the amortization tables when we were done. Of course, that's when I learned the importance of the amortization table in truly understanding a mortgage loan.

Now: You could argue that I shouldn't have bought the house at all and should have rented. Nice try, but wrong. We live in a moderate-to-high COL area and our payments on that house were less than a 3 bedroom apartment. In other words, yes, the loan was an inflation hedge and we DID get back some money after the sale of the house. But it still kept us "house poor" for no good reason other than to pay interest to the credit union.

Now, I don't mean to come across like a complainypants whineybaby. That house was the best we could afford in the best neighborhood we could afford. Our boys spent all their growing up years in a safe and positive and fun environment. We got tremendous benefit out of that house and it did a great job for the time we needed it.

But calling a mortgage "good debt" and saying you should let it go to term is, like most financial lies, mostly based in truth. But it gets down to what your personal situation and goals are, how old you are, and how much income you have and how stable that income is. True, there is a good argument for investing instead of paydown, but if you are in the house already and you don't have a 30 year time window to let your investments grow, then you're on the track of paying the banker his interest and there's no point in that.

If I Had A Do-Over: what would I do differently?

1)  I'd shop mortgages and after 5 years, refi into a 15 or 10 year mortgage.
2) Drive a far more fuel efficient vehicle.
3) Cut costs of things like television, cellphone and utilities.
4) Pump everything I've got into 401k to cut tax burden.
5) Pump all the rest into the mortgage as hard as I could go until payoff.

That's exactly what I'm doing today with the second home.
« Last Edit: September 30, 2015, 06:25:46 PM by mefla »
FIRE in 2020.

ozbeach

  • Stubble
  • **
  • Posts: 164
  • Age: 53
  • Location: Australia
Re: Mortgage Payoff Club!!
« Reply #484 on: October 01, 2015, 12:02:36 AM »
It was painful to wait until 9am to see the numbers flip over this morning, but we're officially below $20k.

On my last payment, I was still a few hundred dollars short. I literally raided the piggy bank and took a huge bag of coins to the bank just to get me over the line!
Late to FI; but better late than never!

ozbeach

  • Stubble
  • **
  • Posts: 164
  • Age: 53
  • Location: Australia
Re: Mortgage Payoff Club!!
« Reply #485 on: October 01, 2015, 12:06:32 AM »
"Letting it Ride", A Cautionary Tale

I don't know if anyone here is old enough to remember higher mortgage interest rates, but my last home carried a 30 year mortgage at 5.25%

They got to 17% in Australia during the early 90s. Can you imagine the trouble people would be in if that happened today!
Late to FI; but better late than never!

marty998

  • Magnum Stache
  • ******
  • Posts: 4309
  • Location: Sydney, Oz
Re: Mortgage Payoff Club!!
« Reply #486 on: October 01, 2015, 01:49:29 AM »
Hmm.. I forgot to post here, but I suppose I joined the Paid Off Club on the 16th.

"Letting it Ride", A Cautionary Tale

I don't know if anyone here is old enough to remember higher mortgage interest rates, but my last home carried a 30 year mortgage at 5.25%

They got to 17% in Australia during the early 90s. Can you imagine the trouble people would be in if that happened today!

It won't happen (anytime soon). The economy would burn long before that happened, negating the need for rates to go that far.

The level of indebtedness is so high that minor movements in rates upwards will have a dramatically higher impact on households than historically.

I'm of the view that the Great Deleveraging* has to happen eventually. Whether it will be quick and painful or long drawn out and painful remains to be seen.

* My phrase, it's not a recognised economic term...yet :)

Comar

  • 5 O'Clock Shadow
  • *
  • Posts: 65
Re: Mortgage Payoff Club!!
« Reply #487 on: October 01, 2015, 03:17:08 AM »
I'm joining in.

I have a house in Iceland. Bought it for 123k dollars (16.5 million icelandic crowns) in 2012. Started making extra payments early last year and am now down to 88.4k dollars. Currently I throw about 560 dollars at it each month. I have also thrown some extra cash at the mortage, such as tax repayments and such.

From the start I have used the strategy of adding to the payments each month. Each downpayment reduces the monthly mortage payment so for the next downpayment I have added the extra dollars the mortage payment has been reduced. Call it a snowball strategy?

My goal is to KO the mortage in 5 years. I'm turning 30 this month and want it finished before I turn 35.
87.5 k left. Paid 562 extra this month.
Payed 1500$ this month which is larger than my average amount. Felt good. The 1st of each month is probably my favorite time of the month.

mom22boys

  • Stubble
  • **
  • Posts: 180
Re: Mortgage Payoff Club!!
« Reply #488 on: October 01, 2015, 10:56:21 AM »
Ok, I think I'm going to make the leap and join in the club.  I originally was convinced with the 'invest it' and make more to pay off the mortgage later, but I just hate having this debt. I'm still going to take a hybrid approach though, similar to mefla and cheddarpie. I'm maxing out my 401k, HSA, rIRA (too high income for tIRA deduction benefit, so I do a tIRA and role over into a rIRA). Plus, so far this year I've even done 14k into my Mega backdoor 401K, which I'll roll over soon into a Roth.  I could do another 6K on the Mega backdoor, but I decided to switch gears and put that toward the house instead.

Mortgage info:
Oct 2105      156k

Goal:
Paid off in 5 years

NoraLenderbee

  • Pencil Stache
  • ****
  • Posts: 979
Re: Mortgage Payoff Club!!
« Reply #489 on: October 01, 2015, 11:39:00 AM »
I'm interested in hearing everyone's stories. I understand the "invest it" argument, but if we paid off the mortgage, that would lower my living expenses by $900 per month. We're in our 50s and, like mefla, don't have a lot of time.

Faraday

  • Handlebar Stache
  • *****
  • Posts: 1200
  • Age: 55
  • Location: NC
  • Solar Powered Slice
Re: Mortgage Payoff Club!!
« Reply #490 on: October 01, 2015, 11:40:34 AM »
Ok, I think I'm going to make the leap and join in the club.  I originally was convinced with the 'invest it' and make more to pay off the mortgage later, but I just hate having this debt. I'm still going to take a hybrid approach though, similar to mefla and cheddarpie. I'm maxing out my 401k, HSA, rIRA (too high income for tIRA deduction benefit, so I do a tIRA and role over into a rIRA). Plus, so far this year I've even done 14k into my Mega backdoor 401K, which I'll roll over soon into a Roth.  I could do another 6K on the Mega backdoor, but I decided to switch gears and put that toward the house instead.

Mortgage info:
Oct 2105      156k

Goal:
Paid off in 5 years

mom22 and nora, keep in mind, I get zero benefit from "selling" this idea to anyone. If it works for you, I'm thrilled. If it doesn't, well, plenty of people here have already called me stupid and that's A-OK by me.

In case this applies any to you, I can summarize my situation this way:

I'm 53 and my stash is about $200k, remaining mortgage principal is $100k.

With mortgage, I would need $1M stash to FIRE and make the mortgage payment at 4% SWR.
(That means I or the market would have to generate $800k.)

With no mortgage, I can FIRE whenever I reach $480k at 4% SWR.
(That means I would have to generate $100k, THEN I and the market would generate $280k, total of $380k to FIRE.

So you see where this goes? Maybe the market returns will produce more money than mortgage prepayment over 30 years, but I don't have that kind of time. If I don't prepay the mortgage, then I'm COMMITTED to the idea that my job plus the market will get me $800k in about however many years it takes. The other way, I reach FIRE poorer, but in a shorter time. I'll be able to FIRE with another $380k in about 5 years.
« Last Edit: October 01, 2015, 11:44:11 AM by mefla »
FIRE in 2020.

mom22boys

  • Stubble
  • **
  • Posts: 180
Re: Mortgage Payoff Club!!
« Reply #491 on: October 01, 2015, 12:11:53 PM »
Thanks mefla.  I've read many threads on this topic, and I see benefit in BOTH approaches.  I just came to a point where I needed to draw a line in the sand, and decide on an approach. As we all know, we are all doing way better than most non-MMMers so I look at it as a win/win.



plainjane

  • Pencil Stache
  • ****
  • Posts: 956
Re: Mortgage Payoff Club!!
« Reply #492 on: October 01, 2015, 12:27:35 PM »
Hmm.. I forgot to post here, but I suppose I joined the Paid Off Club on the 16th.

Congratulations!
Using procrastination to my advantage since 2001.

Neustache

  • Handlebar Stache
  • *****
  • Posts: 1061
Re: Mortgage Payoff Club!!
« Reply #493 on: October 01, 2015, 12:33:20 PM »
mefla - I'm of the pay it down variety, myself, but you are over saving if you are trying to saving your annual mortgage payments times 25.   But I'm with you, I'm paying off the mortgage before FIRE and I have a lower rate than you (4.25).  I could spend some money and refi to a lower rate, but my husband doesn't want to, he just wants it paid off.  I for one will relish in the warm-fuzzy secure feelings I get when we own our home outright, even if we miss some returns.

Faraday

  • Handlebar Stache
  • *****
  • Posts: 1200
  • Age: 55
  • Location: NC
  • Solar Powered Slice
Re: Mortgage Payoff Club!!
« Reply #494 on: October 01, 2015, 02:13:19 PM »
mefla - I'm of the pay it down variety, myself, but you are over saving if you are trying to saving your annual mortgage payments times 25.   But I'm with you, I'm paying off the mortgage before FIRE and I have a lower rate than you (4.25).  I could spend some money and refi to a lower rate, but my husband doesn't want to, he just wants it paid off.  I for one will relish in the warm-fuzzy secure feelings I get when we own our home outright, even if we miss some returns.

Neustache, you are right...if I had 30 years to save. There's another thread where boarder42 is trying to beat me up for the same reason (and he's not being as nice as you about it....). I don't have the cash flow it would take to "oversave", although it's a really nice thought. Before I found MMM, I was already hacking on the mortgage for the historical reasons I mention above in this thread, when I got my ass handed to me by my sweet little local credit union.

I'm on a 5 year plan to FIRE and taking a "blended" approach, because I can kill a $100k-remaining mortgage faster than I can save the extra cash I need to stash in order to generate a monthly mortgage payment of $1700.

What all the "don't pay down your mortgage, stupid!" people mean is that it makes sense over a 30 year window. But I'm hot on fire to FIRE because I'm already in my 50's. So I'm looking for the fastest possible route to FIRE.

What none of those folks can tell you is, how soon you'll be able to overtake the mortgage with payments from your stash. Some believe it's 14-16 years into a 30 year mortgage, but most don't know. cFIREsim doesn't predict that.

And all I have is 5 years. so I take the approach I take.
FIRE in 2020.

YoungGranny

  • Stubble
  • **
  • Posts: 142
  • Age: 27
Re: Mortgage Payoff Club!!
« Reply #495 on: October 02, 2015, 10:42:34 AM »
Been lurking here for a while but figured I'd finally make an account! I also am trying to pay off my mortgage (before I'm 30 ideally)... I bought my house 1.5 years ago with a PMI on it (dumb yes - but i believed it was a good time to buy). Finally paid my balance to 79.8% and they said the PMI won't drop off without an appraisal until it is originally scheduled to reach 78% (ie 7 more years!). Long story short I figured if I was going to pay for an appraisal I might as well re-finance to go from a 4.75% rate to 3.25%. That should be done next month and I just got the appraisal back and my home has gained $20k!! Excited now that it seems like my re-finance will happen with no issues and I'll have that nasty $80 PMI GONE! Sharing here since none of my real-life friends would think it's terribly exciting :)

cheddarpie

  • Stubble
  • **
  • Posts: 209
  • Age: 38
  • Location: Seattle, WA
Re: Mortgage Payoff Club!!
« Reply #496 on: October 02, 2015, 10:58:18 AM »
YoungGranny, congrats!! It's SO AWESOME that you are thinking about all of these things and doing all of these things and educating yourself about all of these things when you are still in your 20s. I'm sure I am not alone in saying I wish I had been as on top of it as you are! :D

NoraLenderbee

  • Pencil Stache
  • ****
  • Posts: 979
Re: Mortgage Payoff Club!!
« Reply #497 on: October 02, 2015, 11:51:44 AM »


mom22 and nora, keep in mind, I get zero benefit from "selling" this idea to anyone. If it works for you, I'm thrilled. If it doesn't, well, plenty of people here have already called me stupid and that's A-OK by me.



Mefla, I now you're not selling anything and I certainly am not calling you stupid. I violently agree with you, actually. I'm 52 and we refinanced a few years ago. I definitely don't want to be paying a mortgage for the next 25 years.

It's likely that I will get an inheritance in the next year or two that will be more than enough to pay it off, and I plan to do it despite the investing-vs-debt argument. (Thank you Mom and Dad for being good with money.)

YoungGranny

  • Stubble
  • **
  • Posts: 142
  • Age: 27
Re: Mortgage Payoff Club!!
« Reply #498 on: October 02, 2015, 12:19:54 PM »
Thank you cheddarpie! It can be discouraging to see everyone on here leaps and bounds ahead of me but I try to use it as motivation to get my butt in gear!

Faraday

  • Handlebar Stache
  • *****
  • Posts: 1200
  • Age: 55
  • Location: NC
  • Solar Powered Slice
Re: Mortgage Payoff Club!!
« Reply #499 on: October 02, 2015, 03:43:18 PM »
mom22 and nora, keep in mind, I get zero benefit from "selling" this idea to anyone. If it works for you, I'm thrilled. If it doesn't, well, plenty of people here have already called me stupid and that's A-OK by me.

Mefla, I now you're not selling anything and I certainly am not calling you stupid. I violently agree with you, actually. I'm 52 and we refinanced a few years ago. I definitely don't want to be paying a mortgage for the next 25 years.

It's likely that I will get an inheritance in the next year or two that will be more than enough to pay it off, and I plan to do it despite the investing-vs-debt argument. (Thank you Mom and Dad for being good with money.)

I just wanted to make sure you know "I come in peace". :-) There be an awful lot o' hot air on this subject in these here parts. I'm a pre-payer but I maximize pre-tax stashing. My post-tax money goes into my "real estate bond". :-)

And please, by all means, violently agree with me anytime. :-) :-) :-)
FIRE in 2020.