I had $6000 burning a hole in my pocket, so I figured I would put it against the mortgage. I estimate I have eliminated $3800 in interest payments. The six I had to pay back any way, the $3800 is somewhat "found money" in spite of the fact i'll never see it....

It is surprising the ammount of money the banks take as intrest on a mortgage....

 

yep... that is why i am saving as much as i can for a down when i buy a house... i am hoping to find something in the 200k-225k range, and i am hoping to go in better than 1/3rd down.. if i don't buy this fall and hold off till next fall, i might be able to squeek close to 1/2 down... then set the payments to be weekly auto deduction from the account... and hopefully have the thing paid for in 10 years or less...

 

If you're planning on keeping the house till it's paid off it's worth doing that. If you're planning on selling in a couple of years, like I am, you are better off just putting it in the bank.

 

Tell ya what is interesting, the diferences in 15, 20 & 30 yr. notes.
We went form 30 yrs (6.125, with only 1 yr. paid) to 20 Yrs. @ 5.6875. The rate drop was not enough to Lower the payment, but I'll tell you it's nice to actually see the principal move a little quicker. (example: orig. note @ 215,000 23 months later $199,000.
Doesn't sound like much, but compare it to a 30 yr. schedule and it's great!
My suggestion would have been to (if rates allowed) to drop the rate and the term (# of years) WITH the additional principal payment.
Better of in this economy to BANK IT, as stated by others.
Good Luck.

 

wish i could have found $6000 just laying around. i'll look in my garage later today

i'm struggling with the same problem. once we sell our house we should have a really big chunk of change. we have almost %100 equity in our home right now. the home we plan on buying we probably won't live in more than 10 years. i don't know if i should invest all of the money into a down payment or just keep the money and put some of it in savings and invest another portion of it in something else. we have a lot of investments at the fire dept. that pay pretty good interest and are relitively safe investments.

something to think about.

britt

 

The other big difference is in the payment schedule. If you have a 20 year note and ask for weekly payments, that knocks roughly three and a half years off the total schedule (now it is ammortised over 17 1/2 years)
we had the term of the mortgage drop when we made the payment.....
With the 1/3 to 1/2 down you will easly avoid the cmhc surcharge.... (canada mortgage and housing corperation. on any mortgage that has less than a 25% down payment they tack up to an additional 3% on your mortgage payment as an "insurance" against a default on your part)

 

Yeah, but if you invest the money and can earn better than the interest rate on the mortgage, you're better off doing that. More risk / more reward.
None of my extra cash goes toward the mortgage...
Chris

 

I never heard of a weekly mortgage payment ... don't know if I am disciplined enough to remember to do that once a week. Interesting idea though.

PISTOL

 

most of the weekely and bi weekly set ups are taken out with electronic funds transfere. it works well if you get paid every week.

 

It is a very interesting deal. My wife works her second job for a financial company. We are getting a second right now and will be paying biweekly. After running all the numbers for the 225,000.00 loan we will save over 28,000.00 in interest and be out of the smaller loan we have now by 14 yrs. It took me a while to figure it out, but worth it.

 

gunracer has it right, the payments are taken out automaticaly. Check into it with your bank, you will be stunned at the interest you will save.

I get paid every two weeks. I keep a float in the bank account, the only challange is not to spend the float. some times the account dips below my target and sometimes it is above.....

 

I don't disagree with this, however, with the low (borrowing) interest rates we have been enjoying also comes low interest earned on investments. Traditional investments recently haven't been puting out.
If you have what it takes to invest in risky ventures, then you will be rewarded.
I'm not a rich man and I really can't afford to lose the investment when something goes sideways, so I stick to reasonably safe low output investments. someday when I have some cash to throw away I'll invest in something risky.....
In the meantime I am one step closer to being debt free. I really am looking forward to the day I come home, look at my house and know it is MINE.....

 

If it is anything like my state it is not really yours. I still have to pay personal property taxes on things I already own. It is better to keep a small home equity loan on your property to take advantage of the tax benefit that this affords. Sounds crazy but this is the way that it is. I basically own my house and it was actually costing me money to “own” my house. I took a small home equity loan and that basically takes care of my personal property taxes come tax time. Sounds crazy doesn’t it? But that is the way that it is.

Britt

 

In Canada, a mortgage (interest) is not something you can claim on your tax return and we still have to pay the property tax......

 

oh wow... that sucks... thought i had it bad.


britt