Is this correct??

[Theoretica]

Ok So DH and I are really working towards full time RVing for a year or two about 6 years down the line. Here's my question. We THINK we can get the entire house paid off before then, if I'm looking at this correctly. But I might not be. So...financial guru mamas please come lend your eye to this!

I'm using general round numbers, not exactly accurate ones.

If our mortgage is 150k. (we just refi'd, no real equity yet)

And our monthly payment is 950 + insurance/taxes bringing it to 1300

And we (after getting all other debt paid off) are able to double house payments.

Meaning 1300 standard mortgage payment, then 1300ish directed solely to principal.

In 5ish years we'd have it paid off?

And we'd save something like 275k in interest by NOT doing the standard amortization schedule?

Is this right??

I'm not 100% convinced we can even do this money/budget-wise, but if we can I want to make sure it's really going to make this difference.

From *my* calculations it's right...but I'm notorious for missing a glaring error.

So.....financial wizard mamas.....have at it!

TYVM!!!!! Y'all rock!

[reader18]

I'm not sure about your math, I'm too sleep deprived to think that hard, but I had fun a couple of weeks ago playing with Dave Ramsey's Mortgage calculator, you might want to give it a look.

http://www.daveramsey.com/etc/reales...e_calc_swf.cfm

[songbird45]

My math says it will be more like 7 years. $150k at 6.5% interest for 7 years is about $2250 / month, which is what you're paying (950 + 1300 = 2250). I'm guessing on the 6.5% interest, but that's the number that gave me a payment of about 950 over 30 years.

[Rev1053]

I don't know what your interest rate is.... and I don't have the time to figure it out.
But I do know that I have used this site before and it REALLY helps DH and I.
http://www.whatsthecost.com/snowball...ountry=us&#160

DH and I have roughly the same size mortgage and if we pay an extra $600 it will take 16 years to pay off.... but I am not sure about yours.
Good luck on your dreams!

[Theoretica]

Oops...I forgot LOL

We're at 6%

Off to play with the calculators...

[Theoretica]

Oh and the math was done at 2am driving home from a road trip...not necessarily accurate, which is why I'm asking all of YOU!

:

[Delicateflower]

I used this for my calculations

http://www.wikihow.com/Create-a-Mort...icrosoft-Excel

That gives me August 2015 for you paying an extra $1300 towards principal every month. But why are the taxes and insurance so much? I've been calculating for us with just payment+PMI. What am I not including?

Playing around with the calculators shows you what a huge difference paying extra off early as opposed to later makes. If you pay an extra $2000 towards principal for the first six months it saves you money over paying and extra $1000 towards principal for the first 12 months. That's because as the principal decreases, the proportion of the payment that is interest decreases, the propotion that's principal payment increases, and so the next month there's even less prinicapl to pay interest on.

[Rev1053]

So if you double your payments on a %6 mortgage....
Starting March 2009 you would have the mortgage paid off in November 2015... According to my calculator.
:

[Theoretica]

Ohhhhh this is coooool!!!

Now to make it affordable.

I'm not understanding how paying more now vs later is better or saves more money...what am I missing here?

So paying 2k now saves more money than paying 1k for the rest of the loan?

Somebody 'splain it to me please

[rebeccalynn]

Originally Posted by Theoretica

Ohhhhh this is coooool!!!

Now to make it affordable.

I'm not understanding how paying more now vs later is better or saves more money...what am I missing here?

So paying 2k now saves more money than paying 1k for the rest of the loan?

Somebody 'splain it to me please

I am not really sure if you are talking about a 1 time 2k extra payment or a continued 2k payment for the life of the loan, but the whole idea is to reduce the principal amount of the loan at the beginning of the loan term so that you see the greatest reduction in interest for a longest period of time.

ps - I just read the post that you are talking about .... the 1k is not for the rest of the loan. The poster is talking about if 1 year you were going to have 12k extra to put toward your mortgage, you would end up better if you were able to pay 2k extra for Jan - June and nothing extra for July - Dec than to pay 1k extra for Jan - Dec. It is all about reducing the principal sooner than later so that you pay less interest.

[Delicateflower]

Have a fiddle with that excel calculator and you can see it in action. If you pay $1000 extra in the first month vs $1000 extra in the 24th month you don't pay interest on that $1000 of principal for 23 months. And what's more, the money that would have been going to the interest goes into paying off principal so you pay less interest overall.

[Theoretica]

I get it now!!! Thank you for being so patient with me!

Is anyone else trying to do this? How do you make it happen?