Small Joys: An Update on Paying Down the Mortgage
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With the low-interest rates out there (still!) I've been checking to see if getting a refinance makes sense for us.
We tried to refinance earlier this year, but the overall costs didn't work out for us.
One of the lenders I checked out was our current one as they offer a streamline refinance.
I discovered that they do, but our mortgage date isn't in the range right now. However the range is constantly updated and since it's close, they'll keep an eye on it (and so will we).
Paying Down the Mortgage is Fun
Checking around has also reminded me of our progress with paying down the mortgage.
Since we got our mortgage we've also added principal-only payments.
We're paying our mortgage down for a couple reasons:
- Finish the Mortgage Sooner -> While we did take out a 30 year mortgage, we'd like to pay it off in 15 years. The plan is that we'd be mortgage free (and completely debt free) by 45.
- Save on Interest Payments-> Paying extra on the mortgage can save you a lot of money, even if it's smaller amounts. If you start at during the early part of your mortgage the benefits can even be better as mortgage payments typically are mostly interest payments.
If you're paying extra on your mortgage, what's your goal date?
Mortgage Payoff Progress
What would an update be without a nice pie chart to show the progress?!
As of this morning, here's what the mortgage pay down looks like:
We've had the mortgage for about 21/2years and have been sending extra principal payments since we started.
It's automated and so far it's allowed us to work on other financial goals while whittling the mortgage down.
Please keep in mind that this pie chart does not represent how much of our house we actually owe.
It's simply showing how much of the mortgage we've paid off so far.
Thoughts on Paying Down the Mortgage
I'd love to hear from you. How many of you are sending in extra mortgage payments?
How do you arrange it- do you add it on to your regular mortgage bill or do you send it in separate?
We have a first and a second mortgage. Unfortunately, we are not “underwater” enough to take advantage of refinancing the second, which stands at 8.24%. The mortgage company won’t budge to help us unless we start missing payments (not an option in my opinon). So we refinanced the first to a 4% (down from 5.875%), shaving a little over 3 years, and $89 a month, off of the loan. We are now sending the $89 a month to the second in an effort to pay it down (according to amortization, this should save us 8.5 years and about $35k in interest). My hope is that rates will remain low until we have a combined LTV of below 80%, at which time we would refinance both loans into a first mortgage at a lower rate (we figure the rate has to stay below 5.5% in order for it to be worthwhile for us).
I personally do not pay my mortgage off early. The money you save is on the back end of the mortgage and those dollars you save are worth less than today’s dollars you put in. I can totally see both sides though and am glad you are attacking it because that is what works for you! Best of luck getting it done in 15 years!
My interest rate is already low enough where I’m not too concerned about paying it off early. Instead I contribute the excess money towards my retirement account. Part of the reason is because I don’t plan to stay in the house for the entire 30 years, and I know for a fact I’m going to end up selling in the near future.
We refinanced this year from 5.5% to 3.5%, and from a 30 year mortgage to a 15 year mortgage. We thought we would send in extra payments, but after two years in our home we had not sent in a single one. So getting the 15-year loan was a smart move for us.
Good luck with yours! I hope your date range qualifies soon.