Paying down mortgage - Page 2

[ShaggyDaddy]

Originally Posted by velochic

ShaggyDaddy, no offense, but it cannot be win-win because you're stuck putting your money one place...

Heh, sorry I didn't mean to make it sound like I was recommending this. I agree that it is better for the bank than for the consumer, but most consumers get nothing for their money when it sits in a little-to-no interest account anyway. I agree that lots of people will try to use this as a last resort, and of course they will be screwed by it. The way it is designed, it better not be your only liquid asset, and most of us that would feel the need to pay our mortgages down, don't have that kind of flexability. I would never do this and I don't really recommend it to anyone unless you have more money than you know what to do with and are too lazy to buy units of a mutual fund every month. Preventing 6% interest with your money is almost as good as earning 6% interest, that's all I am saying.

Also as a side-note, in Europe there are some crazy insane lending practices going on right now... Seriously one product we offer is... the 100 year mortgage... that's right you and your children and their children can all look forward to this loan.: I can't even fathom it. It's true that most loans in Europe are 15 year fixed, but there are still 1,5,10, and 15 year ARMs and those crazy 100 year ones I was talking about. But real-estate markets are significantly more stable since they have been around for typically 2000-3000 years longer than any market in the U.S. they have had time to stabalize so you can actually predict and plan instead of gambling on houses with other people's money like they do in California.

[ZippyGirl]

Make sure extra payments are applied to principal only!!!

Read this link:

http://clarkhoward.com/shownotes/category/4/125/131/

Just make sure any extra payments ARE APPLIED TO PRINCIPAL! That is how you pay the mortgage down quickly. You don't need any special software. It's very simple. Call your lender and ask about making extra payments that are applied to principal only.

[shelf]

Originally Posted by velochic

If I can't understand it (and I consider myself quite financially savvy), then I won't do it. Period. And if I have to pay money in order to pay a debt I already have, then I'm doubly sure I won't do it. The money is better spent simply putting it toward your mortgage principal.

ITA. You'd be better off putting that 3500 toward your principal and paying any extra you can toward your principal as well. We pay extra monthly to our principal plus at least half of our tax refund every year. We're hoping to have our 30 yr mortgage paid off in 14 years if we stay at the rate we're going now.

[velochic]

Originally Posted by shelf

ITA. You'd be better off putting that 3500 toward your principal and paying any extra you can toward your principal as well. We pay extra monthly to our principal plus at least half of our tax refund every year. We're hoping to have our 30 yr mortgage paid off in 14 years if we stay at the rate we're going now.

Well, to clarify my stance... I DON'T believe in paying off one's mortgage early unless you are getting close to retirement. I believe that the money can be invested wisely and you can beat your mortgage interest rate by a few points with simple, long-term mutual fund investing. I have been a big advocate on these boards to NOT pay down your mortgage and invest your money instead. Above, I was just saying it's better to pay it down than to throw that money away on the software. Ultimately, my opinion is to put that money in a good mutual fund.

[skueppers]

Out of curiosity, I actually watched the entire presentation, and feel like I now have a good idea of how the whole thing works.

If you're not paying attention, it might seem as though they're trying to say that you don't wind up paying anything extra in order to pay off your mortgage much sooner. Actually, what this plan has you doing is sending every extra penny you have into paying down the principal on your mortgage. You're also relying on debt for your monthly living expenses -- every penny you spend you're borrowing from the bank, and your paycheck goes to repay that loan every month. Your "emergency fund" is your home equity line of credit.

It seems to me that the major potential benefits of this scheme is that knowing all the money you spend is borrowed might encourage you to be more frugal.

Personally, I'll stick with my current, more conventional arrangements, thanks.

[PJJ]

Thanks so much!

You are awesome.
Thanks for all the posts and educating me.

Take care.
PJJ

[cilantromapuche]

We have paid off our morgage quite early on. It has been our experience that it frees up so much money. We spent a couple of years (4 exactly) of throwing our money at the house and now have money freed up.