Author Topic: Mortgage payoff strategy  (Read 3249 times)

Cervelo123

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Mortgage payoff strategy
« on: November 21, 2014, 09:41:59 PM »
I refinanced in summer of 2013 = $247,000 2.75%/15 yr.  My monthly payment is $1930 and I've paid some extra principal, but not lately.  My current payoff amount is $210,500.00   

Wife and I already max our 401K & ROTH contributions each year and now wondering how I best payoff my mortgage early.  I have about $12K extra each year that I can either invest (taxable account) or just send in extra mortgage payments.  Since my mortgage% is so low, I figure I can invest the 12K in VTSAX, tax harvest when I can, then withdraw at some point and just pay off the mortgage.

How much faster do you think I can payoff my mortgage using the investment route vs. just paying extra principal??

Thanks

RichMoose

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Re: Mortgage payoff strategy
« Reply #1 on: November 21, 2014, 11:17:54 PM »
I would just plan to pay off your mortgage in 15 years. You've locked in at a rate historically much lower than inflation. There's no point in cheating yourself out of this reward by paying off early.

Take the extra money and invest in Vanguard, or Betterment if you're a little on the lazier side.

Spondulix

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Re: Mortgage payoff strategy
« Reply #2 on: November 21, 2014, 11:33:31 PM »
Do you have a copy of your amortization schedule? If you don't, call your lender and ask them to send or mail it to you. It'll show you a breakdown of each month how much you are paying in interest, and how much is in principal. That way, you can add up the principal amounts for however many months you want to pay ahead, and follow along with exactly where you are on the loan. For example (numbers made up):

Monthly payment: $1930
Dec 2015 Principal: $730 Interest: $1200
Jan 2015 Pr: $750   In: 1180
Feb 2015 Pr: $770   In: 1160
Mar 2015 Pr: $790  In: 1140

If you made your regular payment tomorrow for Dec then made an additional principal payment of $2310 (750+770+790), you would be paid up through March 2015. So you can easily calculate how quickly (or how long) it'll take to pay it off. There's calculators online where you can see what you might earn by investing instead, and compare the two.

BooksAreNerdy

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Re: Mortgage payoff strategy
« Reply #3 on: November 22, 2014, 04:38:47 AM »
I would just plan to pay off your mortgage in 15 years. You've locked in at a rate historically much lower than inflation. There's no point in cheating yourself out of this reward by paying off early.

Take the extra money and invest in Vanguard, or Betterment if you're a little on the lazier side.

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