Mortgage Payoff Club!!

[Lmoot]

I officially joined the prepay club in December. Prepaid $15k so far with $41k to go...in my 7th year of a 30 year mortgage. I could pay it off by end of 2017, but I think I'll pay it down to $10k, switch to saving for the DP on an investment property, then pay it off after closing on the 2nd property. That way I don't mess with my credit score (which can drop 50+ points if paying off an installment loan...especially if it's your only one), right before a major purchase. So I'm hoping to have it completely paid off, and to have a second property by end of 2018.

[dandypandys]

Update on the below and lots of thoughts swilling about what to do next.

So I continued with what I said I would do: I am now at $47,658.00!!
Also with a few sales in our condo area, we now owe less than what it is worth. Zillow says it is worth 79k now, though i think it would sell for more. I bought it for 140k in 2003 :( So it is sad to think of selling it for so much less.. but i really would like a bigger home so i can have a better art studio.
I am now wondering all sorts of things, could/should i get a 2nd mortgage, should i rent or sell this condo, should i stick some more savings in the principle or hold in case i need it for a downpayment.



I've decided I'm in! yay! Gonna send a huge check to them this week :) take me down to 68k owed. Then we are going to put an extra 1000 towards it every month. yippee.
We want to sell it in a few years maybe 3, once we have it paid off and have cash for a downpayment on another house.
 Logged

[dandypandys]

I've been reading some of this thread today and have a few Qs for you all.
Is there a nifty worksheet download anywhere to plunk my numbers in and see how much i am saving as i pay down?
Someone mentioned being fined for paying down, i never knew that. i have a coldwell banker loan, do you think i have payment penalties or paying off early penalties?
i just thought i paid it off and that was that, but do i have to have a meeting to discuss that with them??

Ive never bothered to refinance- wondering if i should at this late stage.. i have a 5.9% 30 yr on 130k with 47k left. I could pay it all off today if i really wanted to, but am thinking about buying another place.

thanks for any help given.

[Heckler]

*Replace preceding name with any and all posters who agree with me

:).  Seriously, though, thanks for the reply. We'd be looking at a 3 month build back so I don't see it as a huge issue, and the payoff would be a ton of fun.

I'd go 50/50.  Keep the EF, but dump the bonus onto it.  That said, we've stopped excess mortgage payments in the past two years since I learned how to invest smartly.  Still paid off the mortgage, but also increased savings by 40K.  Caveat - we paid of a 25 year mortgage in 13 years through bonuses, raises etc, but didn't have more than a $3k EF until two years ago.  Worth every penny!

[pdxmonkey]

I've been reading some of this thread today and have a few Qs for you all.
Is there a nifty worksheet download anywhere to plunk my numbers in and see how much i am saving as i pay down?
Someone mentioned being fined for paying down, i never knew that. i have a coldwell banker loan, do you think i have payment penalties or paying off early penalties?
i just thought i paid it off and that was that, but do i have to have a meeting to discuss that with them??

Ive never bothered to refinance- wondering if i should at this late stage.. i have a 5.9% 30 yr on 130k with 47k left. I could pay it all off today if i really wanted to, but am thinking about buying another place.

thanks for any help given.

My mortgage provider has an amortization calculator that will show me how much I save at various payment levels. Mint.com will also do it for you if you set up a goal. I am sure there are generic calculators out there as well as both of those sites require accounts. Shouldn't be hard to find one on google I wouldn't think. Early payment penalties are not typical in the United States, but you should check with your provide. I always check before getting any loan that it has no penalties for early payment, so have never had to do so after the fact. 5.9% is really high. If you decide not to pay it off you should probably think about refinancing whats left into a 10 yr or 15 year with a rate under 3%. What is the remaining period left at a normal payment rate?

[dandypandys]

ah I've never thought to remember that, so went to look, it says 2035.. I have been hacking away at the principle fairly well. I'm glad i probably don't have penalties for early payment of loan, but i should call them to see. One of my friends told me once that refinancing her home was so much work! and so i have just put it off because i haven't had time to deal with it and instead just thought i would pay it fast.

[BlueHouse]

I'm joining the club!!  I want to be out from under the crushing debt of my mortgage.
I've been on the fence about this for a few years and stashing all of my rental income into a sinking fund invested in VTSAX.  Last month I sold all of the sinking fund and I took a big chunk from a cash account to pay down the mortgage prior to a reamortization.  Goal is to pay the mortgage down to a point that I could afford payments even if I'm not employed.  That might be all the way to zero, or it might not.  Even with my plans to continue paying 1000 extra each month, I'm still a looooong way away from retiring this debt, so I'm trying to speed that up.  I still have a long time to figure out the end result.

I'm in a HCOL city in a big house.  I'll show progress in terms of % paid off against initial home value (equity against initial sale price).

Update: 
Progress (%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)
• 02/2016 - 52%  (just bumped my additional principal payment up to 1400 extra each month)

So happy to be over 50%!  I still haven't signed the paperwork for the reamortization.  Should probably do that sooner rather than later, because right now, it's free, but I sort of want to see if I can get it to a nice even number before I do it. 

[dogboyslim]

...Last December we refinanced to a 10 year fixed HELOC at $99k using the proceeds from the prior home sale.  In 2015 we decided that the two of us didn't need 3 cars, so we sold our newest car and put another 25k into the mortgage.  Right now we sit at $34k $32k.  I ended up overwitholding my taxes last year after messing up the prior year due to the move, so we expect to have about $10k in state/federal refund, and we are paying down about $2k per month.  My office did well last year so I'm hoping for a bit of a discretionary bonus (they have done it in other years).  If that happens, we could be mortgage free by May.  Otherwise, December 2016 will be our last payment.

Edit: down to $32k after January pmt

Office discretionary bonus was better than expected so we decided to pay it off.  As of today, We have no debt other than the temporary credit card debt that gets paid off every month.  While it feels good, it also doesn't really feel different as we are about to sit down to our baked chicken for dinner.

[nnls]

...Last December we refinanced to a 10 year fixed HELOC at $99k using the proceeds from the prior home sale.  In 2015 we decided that the two of us didn't need 3 cars, so we sold our newest car and put another 25k into the mortgage.  Right now we sit at $34k $32k.  I ended up overwitholding my taxes last year after messing up the prior year due to the move, so we expect to have about $10k in state/federal refund, and we are paying down about $2k per month.  My office did well last year so I'm hoping for a bit of a discretionary bonus (they have done it in other years).  If that happens, we could be mortgage free by May.  Otherwise, December 2016 will be our last payment.

Edit: down to $32k after January pmt

Office discretionary bonus was better than expected so we decided to pay it off.  As of today, We have no debt other than the temporary credit card debt that gets paid off every month.  While it feels good, it also doesn't really feel different as we are about to sit down to our baked chicken for dinner.

Congratulations!

[Faraday]

...Last December we refinanced to a 10 year fixed HELOC at $99k using the proceeds from the prior home sale.  In 2015 we decided that the two of us didn't need 3 cars, so we sold our newest car and put another 25k into the mortgage.  Right now we sit at $34k $32k.  I ended up overwitholding my taxes last year after messing up the prior year due to the move, so we expect to have about $10k in state/federal refund, and we are paying down about $2k per month.  My office did well last year so I'm hoping for a bit of a discretionary bonus (they have done it in other years).  If that happens, we could be mortgage free by May.  Otherwise, December 2016 will be our last payment.

Edit: down to $32k after January pmt

Office discretionary bonus was better than expected so we decided to pay it off.  As of today, We have no debt other than the temporary credit card debt that gets paid off every month.  While it feels good, it also doesn't really feel different as we are about to sit down to our baked chicken for dinner.

This is fantastic! Congratulations! I'll bet that was the best baked chicken you've ever had!

[pdxmonkey]

...Last December we refinanced to a 10 year fixed HELOC at $99k using the proceeds from the prior home sale.  In 2015 we decided that the two of us didn't need 3 cars, so we sold our newest car and put another 25k into the mortgage.  Right now we sit at $34k $32k.  I ended up overwitholding my taxes last year after messing up the prior year due to the move, so we expect to have about $10k in state/federal refund, and we are paying down about $2k per month.  My office did well last year so I'm hoping for a bit of a discretionary bonus (they have done it in other years).  If that happens, we could be mortgage free by May.  Otherwise, December 2016 will be our last payment.

Edit: down to $32k after January pmt

Office discretionary bonus was better than expected so we decided to pay it off.  As of today, We have no debt other than the temporary credit card debt that gets paid off every month.  While it feels good, it also doesn't really feel different as we are about to sit down to our baked chicken for dinner.

I'm betting next month feels different. No payment to make for the first time. Congrats!

[Heckler]

Someone mentioned being fined for paying down, i never knew that. i have a coldwell banker loan, do you think i have payment penalties or paying off early penalties?
i just thought i paid it off and that was that, but do i have to have a meeting to discuss that with them??

This is not a "do you think" question to ask us.   You have a mortgage contract that will define prepayment terms and conditions.   Understand what you've signed. Ideally before you sign it, but before you overpay by accident would be good too.

[Heckler]

I'm betting next month feels different. No payment to make for the first time. Congrats!

We just had our first pay check that didn't disappear to mortgage oblivion.  Thanks to MMM, it did however disappear to the wife's RSP account to buy emerging markets index which are currently lowest in our allocation. 

So, it didn't feel much different yet.  Still eating spaghettini with homemade meatballs.  We splurged and added green beans though!

[dabears847]

Agreed. It also gives me the ability to look at the market on down days and not feel total despair.

Indexes down 2% today? IDGAF. Burn baby burn! Daddy wants to buy low! ;)

Oh yeah!  I'm not one to time the markets but it feels pretty damn good to have poured all my money into the house when markets were peaking and now shift my focus to investing while prices are going   down.

I'm actually torn on this right now, $32,000 left on the mortgage, and I'd like to invest the bonus in April rather than payoff the house.

[pdxmonkey]

Wait until April and see where the markets are. No need to worry about it now. You can't pay the mortgage or invest until you get the money. If the markets are significantly up or down from where they are now your decision may change.

[Debts_of_Despair]

So after payoff, my credit score went down by over 30 points.  This is without any other major changes in credit activity. Not sure if I should care. 

[William Cannon]

I joined the club last December.  I sleep better at night now for sure.  I also feel a sense of accomplishment to reach this goal in our mid 30s on one income, while my wife stays home and raises our 4 children.  Not only that, but it brought me and my wife closer together since we had to work as a team, endure the same sacrifices for the good of our little clan, and collaborate on how to do it without burdening our family life.  I am truly blessed.

Tapa

[Lmoot]

So after payoff, my credit score went down by over 30 points.  This is without any other major changes in credit activity. Not sure if I should care.

If you don't mind me asking:

1) Do you have a car loan or any other type of loan?
2) How many credit cards do you have?
3) How old was your mortgage when you paid it off?

I ask because I'm concerned about this happening to me when I pay off my mortgage because I don't have any other installment type loan and am wondering if because my mortgage will  be 8 years old when I pay it off, if that will impact my age of credit greatly when I close it. I'll be buying my first rental property about a year after the payoff and the interest rate will already be higher due tp it being an investment property so I want to minimize reasons for lenders to raise the rate of the new mortgage even higher.

[Debts_of_Despair]

If you don't mind me asking:

1) Do you have a car loan or any other type of loan?
No.  Last had a car loan in Nov of 2014.
2) How many credit cards do you have?
Three, with a total limit around 50k.  I only use two regularly.  Utilization rarely goes beyond 4%. This is my only current credit usage.
3) How old was your mortgage when you paid it off?
About 8.5 years.

Keeping up a good credit score is a game for suckers, apparently.

[Faraday]

I ask because I'm concerned about this happening to me when I pay off my mortgage because I don't have any other installment type loan and am wondering if because my mortgage will  be 8 years old when I pay it off, if that will impact my age of credit greatly when I close it. I'll be buying my first rental property about a year after the payoff and the interest rate will already be higher due tp it being an investment property so I want to minimize reasons for lenders to raise the rate of the new mortgage even higher.

MMM frugalists live outside that realm and they know it. When you have zero "back end debt", your credit cards are paid off, cars are paid off and they figure out you've got investments cranking out your living wage, they fall all over themselves to loan money to you.

[Lmoot]

^ I definitely agree that they're for the lenders. They are not meant to reward us for sure. High rollers and high spenders are not the only ones that need to be concerned with credit scores though...folks who are into real estate investing need to maintain a high score as the interest rate will have a direct (sometimes significant) impact on monthly cashflow...which is where my interest lies.

Since I plan on floating multiple properties within the next 5 years, even the slightest increase in the rates I can qualify for could cost me thousands of dollars per year, per property, until I refinance or pay it off.

lol, I'm definitely not rolling around in a brand new 4x4. My 2003 Honda was paid off in 2009 (paid off in 9 months), and I expect to keep it for at least 7 more years, and my monthly requirements are under $1000. My non-necessities push that up a few hundred dollars more, but I could live on less than $1000 if I had to, which would cover mortgage, gas (work from home at 1 job, live 5 min walk from 2nd job), food (parents have a backyard homestead, and I can buy staples at Costco), and car insurance. I could probably even slip my phone bill in there at $40 and stay sub $1k. I could get access to internet via phone/friends/family/library/both jobs. Granted, I DON'T get by on the minimum right now because I don't have to...but it's comforting to know that I could. And I have purposely designed it that way.

And I'll approach my balancing of real estate expenses the same way...minimize minimize minimize....which unfortunately means playing the game I was never meant to win.

[Lmoot]

If you don't mind me asking:

1) Do you have a car loan or any other type of loan?
No.  Last had a car loan in Nov of 2014.
2) How many credit cards do you have?
Three, with a total limit around 50k.  I only use two regularly.  Utilization rarely goes beyond 4%. This is my only current credit usage.
3) How old was your mortgage when you paid it off?
About 8.5 years.

Keeping up a good credit score is a game for suckers, apparently.

Thank you so much for sharing that. My profile looks similar...paid off car, no other loans than mortgage, will be at 8 years at pay off, except I have 5 cc's. My current utilization is about 15-20% due to balances that are paid off in full each month, and a balance on a 0% promotion. But that will be gone by the time I apply for a new mortgage, and I'm aiming for 0-5% utilization.

I'm thinking about leaving a little of the mortgage left and paying it off after I buy another property so my credit doesn't drop, but it sure would be easier and faster to save for a DP with it completely gone so I won't have that monthly bill anymore.

[IndyPendent]

Paid off today! Couldn't believe the size of the smile on my face!

Paid off in 4.5 years--the mortgage was just 1.5x salary at the beginning (pre-MMM days).

Ramped up efforts in early 2013, wrote the final check today!

[MrDelane]

Paid off today! Couldn't believe the size of the smile on my face!

Paid off in 4.5 years--the mortgage was just 1.5x salary at the beginning (pre-MMM days).

Ramped up efforts in early 2013, wrote the final check today!

Congratulations.
4.5 years is an impressive achievement.

[BBub]

That's awesome IndyPendent!  Congrats!

[dandypandys]

Congrats!!! Indypendant

I just wrote a 1000 check today for principle :)
That should take us down to 45k once our normal payment comes out in a few days too.
yippeeeee

[pdxmonkey]

I've been working at my mortgage for a while now. I originally had a 30 yr $146000 loan. In 2012 I refinanced into a 15 yr @ 2.875%. As of today I have about $67,500 remaining.

I flip flop between investing more and paying off the mortgage. I have been maxing out my contributions to a Roth IRA since my mid 20's and last year I maxed out my 401k (Roth) for the first time and will be doing so again this year. I had always considered retiring early, but have only recently considered retiring extremely early and finally about 2 months ago opened up a taxable investment account in addition to my 401k and IRA accounts as I'll need money outside those accounts to live on. I've put some money into this and started paying the mortgage down less aggressively although still more than the minimum payment. I really want to get it paid off even though mathematically it is not necessarily the best idea. If P/E ratio goes lower on the market I will probably not pay any extra on the mortgage.

Down to $60k as of tomorrow. I threw some dry powder at it as the S&P 500 is still near all time highs and I feel like I'm dollar cost averaging in enough per month right now. Flows out of my bank savings account into the market + my recent mortgage payments are greater than my current income so doing both isn't sustainable long term. I will probably have to slow down the mortgage payoff next year some time OR work more to keep paying it down quickly. $60k seems really close to being done, but calendar wise there is a good distance to go.

Jan. 2015 - ~100k
Oct. 2015 - ~$67500
Dec.3, 2015 - ~$60k
Feb. 5, 2016 - $52,108.53

Not allowed to contribute to a Roth IRA this year. I don't like the current market prospects enough to put the whole $5500 I was going to put into the Roth for 2015 into a taxable account so I used some of it on the mortgage. It's exciting to see my balance go down so quickly since the beginning of 2015, but disappointing to know this rate is no longer sustainable long term now that late last year I started investing in a taxable account as well. Because...the math.

March 7, 2016 - 49,774.21

[BlueHouse]

I'm joining the club!!  I want to be out from under the crushing debt of my mortgage.
I've been on the fence about this for a few years and stashing all of my rental income into a sinking fund invested in VTSAX.  Last month I sold all of the sinking fund and I took a big chunk from a cash account to pay down the mortgage prior to a reamortization.  Goal is to pay the mortgage down to a point that I could afford payments even if I'm not employed.  That might be all the way to zero, or it might not.  Even with my plans to continue paying 1000 extra each month, I'm still a looooong way away from retiring this debt, so I'm trying to speed that up.  I still have a long time to figure out the end result.

I'm in a HCOL city in a big house.  I'll show progress in terms of % paid off against initial home value (equity against initial sale price).

It seems that my timing was somewhat fortuitous - selling off my sinking fund near the top of the market and moving the cash to my mortgage and then slowly buying back in at a lower price as cash becomes available (earnings and 401k match).  It's great when things work out, but I'm under no illusions that it had anything to do with my acumen, and instead realize that the next time it could be the opposite.  So I still want to pay this house down, and plan to make one more sizable deposit before I sign the paperwork for the recast (can you believe I still haven't done it!?) 

Anyway, not huge progress since August, but here's the updated list:
Progress (%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)

Here's the best part (to me):  Originally slated to make last payment at the age of 74.  As of today, my last payment is scheduled for age 64!  And moving each month. 

[Faraday]

... broke $100k on the mortgage principal owed. Today it's $98,519.67.

I'm liking the energy this thread keeps tapping into. Awesome mortgage paydown energy here!

Even with my plans to continue paying 1000 extra each month, I'm still a looooong way away from retiring this debt, so I'm trying to speed that up....pay this house down, and plan to make one more sizable deposit before I sign the paperwork for the recast (can you believe I still haven't done it!?) 

GO GO GO BlueHouse! You are in good company, don't fret that you delayed the recast - you well know, the more you do up-front, the lower the payment will be after the recast. (and if they are like my mortgage provider, they recast ONLY ONCE, so you gotta make it good....) I'm aiming for a recast by May 2016, which is much later than I'd planned, but it's not a problem.

Please keep us posted - I want to hear what happens to your monthly mortgage payment after the recast!

[couponvan]

We have $18K left...We've been adding an extra $1.25K to the payments certain months as we are able.  Plan to drop a large payment out of DH's bonus 3/15/16 and have our mortgage gone by 9/8/16....Of course last year I said something similar when the balance was around $26K and then the following week our kitchen and basement were flooded and we spent all last Summer redoing our kitchen.

The basement is still at the studs...We'd rather cash flow it without a 4.625% interest rate so we're trying to pay off the mortgage first.

Joining the club should give us the incentive to finish strong.

[pdxmonkey]

I'm joining the club!!  I want to be out from under the crushing debt of my mortgage.
I've been on the fence about this for a few years and stashing all of my rental income into a sinking fund invested in VTSAX.  Last month I sold all of the sinking fund and I took a big chunk from a cash account to pay down the mortgage prior to a reamortization.  Goal is to pay the mortgage down to a point that I could afford payments even if I'm not employed.  That might be all the way to zero, or it might not.  Even with my plans to continue paying 1000 extra each month, I'm still a looooong way away from retiring this debt, so I'm trying to speed that up.  I still have a long time to figure out the end result.

I'm in a HCOL city in a big house.  I'll show progress in terms of % paid off against initial home value (equity against initial sale price).

It seems that my timing was somewhat fortuitous - selling off my sinking fund near the top of the market and moving the cash to my mortgage and then slowly buying back in at a lower price as cash becomes available (earnings and 401k match).  It's great when things work out, but I'm under no illusions that it had anything to do with my acumen, and instead realize that the next time it could be the opposite.  So I still want to pay this house down, and plan to make one more sizable deposit before I sign the paperwork for the recast (can you believe I still haven't done it!?) 

Anyway, not huge progress since August, but here's the updated list:
Progress (%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)

Here's the best part (to me):  Originally slated to make last payment at the age of 74.  As of today, my last payment is scheduled for age 64!  And moving each month.

Very nice work. Shaved 10 years off. My goal is similar. I want to not have to worry if I get laid off and have to sustain myself on unemployment for a bit vs draining the stache. I looked into recasting, but my provider does not recast, so it's zero or bust.

[BlueHouse]

(and if they are like my mortgage provider, they recast ONLY ONCE, so you gotta make it good....) I'm aiming for a recast by May 2016, which is much later than I'd planned, but it's not a problem.

Please keep us posted - I want to hear what happens to your monthly mortgage payment after the recast!

Thanks Faraday!  Yes, mine only does it once as well.  I don't think it makes any difference financially whether I wait a little longer to re-cast or do it immediately.  After all, interest is calculated against my outstanding principal.  Do you know if there's any advantage to recasting now vs. 6 months or a year from now?  (Assuming the option to do so for free still exists).

[I looked into recasting, but my provider does not recast, so it's zero or bust.

Yikes.  I thought all mortgages allowed for one recast.  I hope mine doesn't take the option away. 

[Lmoot]

The benefit of recasting later is if you make pre payments along the way. I've prepaid my mortgage by $15k and even though my lender required a $5k payment within 30 days of recasting...the previous amount I've paid down will affect my new monthly payment. Most recasts won't affect your monthly payment that much unless you prepay early into the mortgage. I'm 7 years in, 15k prepaid. I want to get to 50% pre paid within 10 years, then recast the other 50% out to the remaining 20 years (which I'll probably pay off early once I reach a certain level of investment property cash flow).

[ryan.triguy]

Hello All..

I was wondering about some quick advice from fellow MMM's.  I was just introduced within the last month and have been eating the info as fast as I can.  My wife is totally on board as well which is awesome. 

The advice I am seeking follows the mortgage payoff.  We have started paying an extra third of our monthly payment in bi monthly payments on our 30 yr which is really at 28.5 yrs at 3.375%.  We were going to refi but after lots of consideration she wanted to hold off since the rate would not change much and we could still just make the same inflated payment.  We have an extra 20k sitting doing nothing in savings.  I know we have been ignorant to the ways of money working for us.  We are debating if it would be better to throw this at the mortgage or start a Vanguard type stock.  She already contributes to a roth IRA and I have retirement through work and a deffered compensation that I contribute to at work.  She is also finishing out her Military time with reserves which will benefit us greatly once we can draw from it.

My thinking is although we have several avenues once we hit the random ages set up by retirement.  I want to retire early, which will reduce my pension.  I know I will keep working part time and she will work as well. 

Would it be better to keep attempting to be mortgage free or put the 20k in say Vanguard and let it work or us. 

My long term plan is to pay as much as possible in the next 6 yrs on mortgage at that point retire at 15yrs on job which give me 30% at 60yrs old.  At that point sell our house moving back to the Midwest where her family is and buying cash for house.  Then working part time while kids are in school. 

Any thoughts?  Any and all are appreciated.  Sorry if im tagging on to the Mortgage payoff but in a way it is working toward the same goal.  Thanks

[Rural]

Hello All..

I was wondering about some quick advice from fellow MMM's.  I was just introduced within the last month and have been eating the info as fast as I can.  My wife is totally on board as well which is awesome. 

The advice I am seeking follows the mortgage payoff.  We have started paying an extra third of our monthly payment in bi monthly payments on our 30 yr which is really at 28.5 yrs at 3.375%.  We were going to refi but after lots of consideration she wanted to hold off since the rate would not change much and we could still just make the same inflated payment.  We have an extra 20k sitting doing nothing in savings.  I know we have been ignorant to the ways of money working for us.  We are debating if it would be better to throw this at the mortgage or start a Vanguard type stock.  She already contributes to a roth IRA and I have retirement through work and a deffered compensation that I contribute to at work.  She is also finishing out her Military time with reserves which will benefit us greatly once we can draw from it.

My thinking is although we have several avenues once we hit the random ages set up by retirement.  I want to retire early, which will reduce my pension.  I know I will keep working part time and she will work as well. 

Would it be better to keep attempting to be mortgage free or put the 20k in say Vanguard and let it work or us. 

My long term plan is to pay as much as possible in the next 6 yrs on mortgage at that point retire at 15yrs on job which give me 30% at 60yrs old.  At that point sell our house moving back to the Midwest where her family is and buying cash for house.  Then working part time while kids are in school. 

Any thoughts?  Any and all are appreciated.  Sorry if im tagging on to the Mortgage payoff but in a way it is working toward the same goal.  Thanks

Wait a couple of months and read a lot more. I'm usually pretty firmly in the pay off the mortgage camp. But there are good reasons not to with a rate as low as yours. If you hang around here for a couple of months, you'll be in a much better position to make an informed decision for your $20k, and a couple of months almost certainly isn't going to make a big difference in terms of gains,

[asauer]

Down to 84k.  Picked up a couple of gigs for this month to make some more headway. 

[Money Badger]

@ryan.triguy,  What is the best way to improve your monthly "margin of safety" in cashflow?   Does $20K need to pay off any other debts that will increase your monthly free cash flow?   That's where the real magic begins to pay off debt...  when you turn the momentum in the your favor.

Also, without knowing your mortgage balance, it's impossible to say if putting the $20K in the mortgage is worth it.   If you put that chunk, plus other principal prepays together, you may be in a position to "recast" the mortgage, again to reduce your monthly "commitment" and improve free cash flow.   Then apply the free cast towards the mortgage (accelerating payoff since you'd no longer be paying off interest on that $20K that just extends your payoff timeline)!

[FunkyStickman]

Down to $56K, and about to drop my tax return on it (again). Just that will cut almost 9 years off the mortgage. (EDIT) We've cut 9 years off total so far... not from this 1 payment.

For every dollar I pay on principal, I'm paying $1.75 in interest.

Sickening. My wife is finally 100% on board with this.

[ryan.triguy]

indentured4now,  Mortgage is the only debt we have.  We haven't paid down enough to recast yet.  Im not really worried about the monthly payment now just thinking more of long term paying it down.  My thoughts are to pay down enough so when we are ready to sell 8-10 years we would net enough to downsize and pay cash, possibly enough left over to invest at that point.  Im just debating if it would pay more in the future to invest the 20k now in longer time in more would make.  Seems like either way is going to save me money in long run. 

[frost7777]

Hello, first post after following MMM for several years.  Started getting serious about paying the mortgage off in 2014.  Hopping to join the club by next March!

Single income.
My wife stays at home with our three children.

12/2010 < 80k
03/2013 < 70k
04/2014 < 60k
12/2014 < 50k
09/2015 < 40k
03/2016 < 30k
03/2017 = 0 ?? 

[BlueHouse]

I have 12.5 months left on my mortgage. What do people around here do to celebrate, when it's all done? Would taking the kids to Disneyland be facepunch-worthy? they've missed out on fun stuff because of my financial priorities, so including them in the reward seems fair, and like an object lesson in priority-setting.

so: Disneyland in 2017?

Need more info.  Where do you live? how old are the kids?  Drive or Fly?  Why do you think going to Disneyland would be more fun for them than camping or going to the beach?  What lesson are you trying to teach them and how does Disneyland fit in to that lesson? 

[Neustache]

We are going to DisneyWorld for the first time when we pay off our mortgage (but we also go to Disneyland once a year on our huge road trip).   We'll drive down (MO) because there's things to do on the way there and the way back.  I personally don't find it face-punch worthy but most here would. 

[dandypandys]

I just put another 1k in, so down to 44k now :) Also, I figured out how to do it direct debit, so i saved a stamp and future stamps too. Bonus!

[Kaydedid]

I ask because I'm concerned about this happening to me when I pay off my mortgage because I don't have any other installment type loan and am wondering if because my mortgage will  be 8 years old when I pay it off, if that will impact my age of credit greatly when I close it. I'll be buying my first rental property about a year after the payoff and the interest rate will already be higher due tp it being an investment property so I want to minimize reasons for lenders to raise the rate of the new mortgage even higher.

MMM frugalists live outside that realm and they know it. When you have zero "back end debt", your credit cards are paid off, cars are paid off and they figure out you've got investments cranking out your living wage, they fall all over themselves to loan money to you.

Seconding this.  Check out local banks and credit unions if you can.  4 years ago, we had poor credit due to fiscal responsibility (no prior loans), and while the big banks wouldn't give us the time of day, both the local bank and credit union immediately approved us for much more than we were looking to borrow.  They actually sat down with us and got an accurate financial picture, whereas the big banks just ran the credit score.

[Kaydedid]

As of today, owe ~$8.7k on the mortgage, and looking to have it paid off by the end of the year!
Original mortgage was ~$45k 3.5 years ago, but we dumped another $40k into repairs (foreclosure that needed a TON of work).

We have enough in savings to kill the mortgage today, but will wait a few months to see how a major pay cut/job change shakes out.  Can't wait to be rid of this-our only debt! 

[McGeens]

We've joined the club- paid off our mortgage in January. I've let the dust settle and rebuilt our Efund, but it feels wonderful. Started at $250k in 2007, but the first few years were slow going. Then we got focused and honed in on it in 2011, when we owed $165k. We're in Oz, so technically the account isn't closed but it is fully offset now. It feels wonderful to have it gone!!

Funnily enough, first thing the bank did was write to us offering a new mortgage and encouraging us to redraw for important life needs like renovations and cars (cars!! Seriously). I stuck that letter on the wall next to our payoff chart- ha!!

Good luck to all of you whittling down your balances. It'll all be worth it!

[asauer]

I have 12.5 months left on my mortgage. What do people around here do to celebrate, when it's all done? Would taking the kids to Disneyland be facepunch-worthy? they've missed out on fun stuff because of my financial priorities, so including them in the reward seems fair, and like an object lesson in priority-setting.

so: Disneyland in 2017?

No- I think it's just whatever your family would like, fits in your budget and fits with your values.  Travel is our "thing" and it's been on hold while we knock out the budget.  We'll be taking the family to Belize when we pay it off (hopefully 12/16).

[redbirdfan]

For those of you who knew you wanted to pay the mortgage off early at the time of purchase, did you go with a 15 year, 20 year, 30 year or ARM?  Did you value flexibility or paying less overall interest more?  If you could go back, would you make the same decision?   

[Monocle Money Mouth]

For those of you who knew you wanted to pay the mortgage off early at the time of purchase, did you go with a 15 year, 20 year, 30 year or ARM?  Did you value flexibility or paying less overall interest more?  If you could go back, would you make the same decision?

I knew I wanted to pay it off early, but I didn't have a job that would allow me to afford a 15 or 10 year mortgage at the time. We went with a 30 year loan at %6.24 in late 2007 and I paid extra principal when I could afford  it. We just refinanced to a 10 year %3.39 loan last year and have been making great progress with extra principal payments and the fact that the regular monthly payment now consists of more principal than interest.

With the benefit of hindsight, we should have stayed in our cheap 1 bedroom apartment for a couple of more years and saved like crazy. We could have bought a house outright or gotten a 10 year loan with a super low monthly payment. If we could have started with a 10 year loan back in 2007, I still would have tried to pay it off sooner.

[BlueHouse]

For those of you who knew you wanted to pay the mortgage off early at the time of purchase, did you go with a 15 year, 20 year, 30 year or ARM?  Did you value flexibility or paying less overall interest more?  If you could go back, would you make the same decision?

Flexibility. My job is not super-secure, and I'm risk averse. I want the flexibility of having a smaller minimum req payment, but I'd like to do it in 15 years (or less).