Paid off mortgages mamas

[PJJ]

I am trying to get to this club status.

Please tell me what worked for you?

The every two weeks?
$100 every week?
One extra payment a year?

Please share your stories please.

I had a 30 year fixed in Feb 2002 set to be paid off in Feb2032.

I have paid extra as I could and now it will be paid off in March 2021, so I am proud so far, so good.

Please frugal mamas--I love frugal stories

[mnnice]

We put extra money toward principle since buying our current home in 2001. In 2005 we decided to get hardcore about it. We also refinanced in 2002 and 2003 (both 15 years with no cash out and very low closing costs.)

We had our regular payment auto deducted from checking monthly. Then ever month or every other month wrote another check with (with extra toward principle written in the memo) to the mortgage company. The only other thing we did was put the monthly statement on the fridge for extra motivation.

We've been mortgage free since May of 2007.

[1growingsprout]

When we had a mtg we were viligant about paying it off. At the time it was the only debt we had. We are currently debt free, and need to stay that way.

[Kyamo]

We have been on weekly payments since the beginning of the mortgage. I don't really understand why that's better than the two weeks, but the numbers showed it was. Its deducted automatically from our bank account. In addition, any time we'd saved some extra, we paid a lump sum. Our terms allow up to 15% a year lump sum. Our mortgage has higher interest than the car loan or the student loans, so its the one we're attacking. I hope to be totally debt-free in about 8 years.

[cyclemama]

We paid off our 15-year mortgage in a little over five years. We decided to live on DH's salary only and put all my part-time income toward the mortgage. DH's salary is pretty average, and I work about 24-28 hours a week. We had a decent downpayment, so our mortgage was about $100K. (We live in modest house in the Midwest).

I get paid every other Thursday and would send a check to the mortgage company on each of my paydays for the size of my paycheck. Sometimes I would add a hundred or so if I could, and sometimes I would subtract a couple hundred if money was tight. So, every other paycheck would go for the monthly mortgage bill (with some extra), and every other paycheck would be totally extra. I would send that check with a little sticky note on it that said "To be applied toward principle only for acct #___________.

After a couple years I got lazy and just waited until the end of the month when the mortgage payment was due and sent one big check for the amount of both my paychecks for the month (give or take). We also sent bonuses, tax refunds, etc. to the mortgage company.

DH and I would always be excited to see the monthly mortgage statement to see the principle owed go down each month, and to see the decreasing amount of interest owed as a portion of the next payment. Now, it is great to be totally debt-free in a paid for house. If DH were to lose his job, we could survive only on my income since we have no house or car payments. I was all totally worth it. Now, we have my paycheck deposited directly into a separate money money account, and we use that account only for major expenses, like adoption fees, a new refrigerator, etc. We also take money from that account to fund our IRAs and contibute to our kids' college funds each year.

Cyclemama

[monkey's mom]

We bought a house low and sold at the height of the market. Then we moved to a lower cost of living area and paid cash for our current house. :

[SeekingJoy]

Can someone recommend a good online calculator to show how much earlier a mortgage will be paid off? We have been putting extra here and there, and knowing each time we knock a year off would be great motivation.

[mnnice]

Cyclemama your story is so similiar to our it's a bit weird. Unfortunately, the part about DH losing his job is not hypothetical. It starts 12-1. We would be totally stressed if I SAH full time and we still had a mortgage.

[phathui5]

I'm loving reading this thread. We have always put extra towards paying off our mortgage, but not nearly as much as I'd like and there's no real end in sight yet as we still owe $190,000.

[PJJ]

thanks

Keep those ideas coming ladies.
Seems like the past with good rates and easy re-fis are over.

Any ideas on the weekly thing?

Should it go to payment. Our WAMU account is so nuts, that even with instructions, everything gets messed up.

For instance, each time I pay extra, I have to specifically email to say it goes to principal--even though I have instructed them now over a hundred 60 times.

:


I am enjoying hearing your stories paid off mortgage mamas.

[mamamelia]

paying weekly is better than fortnightly or monthly because... say your mortgage is $800 a month. now break that up into fortnightly and weekly payments accordingly.

paying $200 every week will have you putting in $10400 per year.
paying $400 every fornight will have you putting in $10400 per year.
paying $800 every month will have you putting in $9600 per year.

there is no difference in the input if you do weekly or fortnightly payments until you take into account the small difference that reducing the principal makes for overall loan term. if you owe $10000 on your first (wouldn't everyone love a mortgage like that?) and you put in $400 two weeks later, on the 14th day you would be paying interest on the new amount of $9600.
now, if you were putting in weekly payments of $200 instead, on the 7th day you would be paying interest on the new amount of $9800 (whereas if this was fortnightly payments, on the 7th day you'd still be paying interest on the amount of $10000 because you haven't put in any payments yet). interest is calculated and compounded daily, which is why extra more frequent repayments are better in the long term. eventually, you will be charged interest on a certain day of the month, but between that time from each month to month, more frequent repayments will have less sitting in your loan debit to be charged on daily.

i hope this makes sense.

[AngelBee]

:

[notkept]

Originally Posted by AngelBee

:

Recently I had to talk to my mortgage company, CitiMortgage, about a different issue. They are REALLY pushing the bi-monthly mortgage plan. They send mailers at least once a month, it's all over their website and they pushed it during the phone call. It costs $350 to sign up and the payments go through a third party. I asked the operator why I couldn't just make the payments biweekly by myself. Apparently, if they get a partial payment early, it won't be applied to your account. It sits in a limbo account until a full payment is made. @@ I think there may also be one of those monthly "convenience fees" involved. I'm skipping it. I'll stick to the old wisdom that making an extra payment a year...all at once or a little at a time thrown in with your regular payment shaves your loan life. Actually, I'm not paying any extra right now. But since my mortgage sits at about 65k and I'm a student and single mom, I'm OK with that. In two years, WATCH OUT! I'm getting mortgage free as fast as possible. (and I don't care EVER if investments could make more in interest than I pay in interest. I'm killing the mortgage.)

[BookGoddess]

:

Am loving this discussion...

Houses here are so expensive. The average house costs over $600k. We are doing our darndest to pay off the mortgage but we still have somewhere in the neighborhood of $140k left to pay off. It's not bad considering where other locals are with their mortgage but I would love to have the entire thing paid off.

[JTA Mom]

This thread is awesome!

When dh & I are in a position to buy a house, we are doing a large downpayment & lots of extra payments. I was actually thinking of doing it like Cyclemama did! Hmmm, great minds think alike?

Originally Posted by BookGoddess

:

Am loving this discussion...

Houses here are so expensive. The average house costs over $600k. We are doing our darndest to pay off the mortgage but we still have somewhere in the neighborhood of $140k left to pay off. It's not bad considering where other locals are with their mortgage but I would love to have the entire thing paid off.

They are insanely expensive here too, BookGoddess. Right now, due to the housing crisis, it's closer to 550k, which is still a LOT of money for an average house--not even going to touch McMansions!

If things work out the way I hope, we'll be able to buy a house in 5-6 yrs with a nice downpayment--for today's prices. Hopefully the prices won't spike too much between now & then, which, looking at the bubble here, I don't think they will.

Kinda off-topic, but I've never understood people who keep telling me having a mortgage is the best thing to do financially--and that working to get rid of it faster is 'not smart'--aka the 'tax write off' won't be there anymore. I never understood why that darn tax write-off is so attractive that one wants to stay in debt for a long time.

Ami

[mamamelia]

Originally Posted by notkept

Recently I had to talk to my mortgage company, CitiMortgage, about a different issue. They are REALLY pushing the bi-monthly mortgage plan. They send mailers at least once a month, it's all over their website and they pushed it during the phone call. It costs $350 to sign up and the payments go through a third party. I asked the operator why I couldn't just make the payments biweekly by myself. Apparently, if they get a partial payment early, it won't be applied to your account. It sits in a limbo account until a full payment is made. @@ I think there may also be one of those monthly "convenience fees" involved. I'm skipping it. I'll stick to the old wisdom that making an extra payment a year...all at once or a little at a time thrown in with your regular payment shaves your loan life.

we've never had this issue, but we are also not with citibank. just wanted to raise the point for everyone to read thier contracts word for word as not all banks would have the same rules regarding this. the ability to reduce the principal amount owing immediately through making a payment then and there is up and running in our account, it doesn't sit idly until a certain date. if i did then yes are you are right there would be little point in extra frequent repayments.
with your loan debt of 65K, it's probably not going to be worth your while to pay the $350 extra every year to have that advantage of "principal reduction" when ever you want it. but for someone with a higher loan value, like well into the 400 and 500K's, it might actually turn out to be a saving. one needs to sit down one kid-free evening with a calculator, a notepad, pen... and a large cup of coffee and start calculating away (it's sick people like me who actually enjoy this stuff). some mortgage plans do actually keep you on top, it depends on your circumstances and if you utilize the plan well. in your case, i'd say your far better off putting that extra $350 into your loan than giving it to the bank to keep funding a certain type of loan.
and btw, way to go! single mama and almost mortgage free.

[Kyamo]

Originally Posted by JTA Mom

Kinda off-topic, but I've never understood people who keep telling me having a mortgage is the best thing to do financially--and that working to get rid of it faster is 'not smart'--aka the 'tax write off' won't be there anymore. I never understood why that darn tax write-off is so attractive that one wants to stay in debt for a long time.

Well, in Canada that tax write-off does not exist. If it did, it would probably make me decide to pay off all other debts before the mortgage, instead of going by interest rate as I am now, which means mortgage first. I doubt it would be enough to stop me from paying it early after I'd killed the other debts though, but I'd have to sit down and do the calculations.

[meowee]

We made double and triple payments toward the principle for three years, then refinanced to a 15 yr mortgage at a better rate, and aggressively paid that off over the next two years. The final lump we borrowed from our 401k (the account is associated with a home business so there was nor risk of being laid off and having to pay it back at once) and we aggressively paid that self-loan off within a year. We are now debt free.

[SeekingJoy]

Originally Posted by meowee

We made double and triple payments toward the principle for three years, then refinanced to a 15 yr mortgage at a better rate, and aggressively paid that off over the next two years. The final lump we borrowed from our 401k (the account is associated with a home business so there was nor risk of being laid off and having to pay it back at once) and we aggressively paid that self-loan off within a year. We are now debt free.

Meowee, this is incredible. Congratulations! :

In the past year since I started SAH, we have paid off our student loans and car. We also went from 3 months of salary in savings to the 8-9 month range. My goal is a year of cash, and then we are throwing everything at the mortgage.

It is amazing to me that we did this so quickly with only 2/3 the income, and one that is less than the median household income here, too. It is amazing to me the power of compound interest. And determination. I want to be debt free so badly.

When paying off our student loans, I made a paper chain. Each extra payment we made took another loop off the chain. I was so excited to pay it off!

[SleeplessMommy]

Originally Posted by notkept

Recently I had to talk to my mortgage company, CitiMortgage, about a different issue. They are REALLY pushing the bi-monthly mortgage plan. They send mailers at least once a month, it's all over their website and they pushed it during the phone call. It costs $350 to sign up and the payments go through a third party.

Citimortgage is a little broke right now - Citi is laying off 50,000 employees. I think the $350 fee per year is just and attempt to get them a little extra cash.
http://money.cnn.com/2008/11/17/news...roup/index.htm

If you make a partial payment with written instructions to pay off principal, I think they have to take it (unless your mortgage note says differently.)