smokin5s Posted January 20, 2018 Author Report Share Posted January 20, 2018 we're in total agreement! Thus why I'm wanting to know everyone's tricks to getting their home paid off quicker. Quote Link to comment Share on other sites More sharing options...
evan9381 Posted January 20, 2018 Report Share Posted January 20, 2018 I find it interesting that people think keeping debt and paying insane monthly payments is a better answer to not having that debt... The part I'm also having a hard time understanding. You can get a 7 year loan on a Tesla that's 100k and pay $1,2xx a month on it and pay it off... Why am I paying more and not paying off that amount as quickly? The way that mortgages handle the interest is the problem. They have you pay off the interest first before principal really gets affected... To me, that should be illegal. I think it's called amortization. because that's either A) they have a 0% (or near 0%) interest loan. $1200 x 84mo = $100,800 or B) they're paying say 5% interest but put $15k down and have an $85k loan. If you get a car loan for 4% or whatever rates are right now, it's going to be the same way. Interest is charged on the balance of the loan, so it's always going to be higher at first and near 0 at the end. Go to bankrate.com and look up a loan calculator, plug in some numbers and then look at the amortization table. It'll show you what you're paying in principle and interest each month. You'll see how at the start the interest is high and the principle is low and gradually it flips. I think my mortgage right now applies about $110 to principle and $300ish to interest, in 10 years it'll be about 50/50, and towards the last couple years it'll probably be like $350 in principle and $60 in interest. The nice thing too is you can plug in what your current balance is, rate, and it'll give you the option to say "if I pay $XXX extra each month" and it'll show you how it'll change the payoff date. Quote Link to comment Share on other sites More sharing options...
bdhill Posted January 20, 2018 Report Share Posted January 20, 2018 Goal is always financial freedom but using someone else’s money and low rates to make more is an option in this economy. No right or wrong answer, just how you play the game. Quote Link to comment Share on other sites More sharing options...
dq driver Posted January 20, 2018 Report Share Posted January 20, 2018 with rates super low, under 4%, not a lot of upside to paying it off early...amazon stock has gone up 40% in 3 months...better place to put money for a quick gain, and then pay off house? Risk is the issue. By eliminating your mortgage, you can GUARANTEE that you will not have that ~4% loss, year after year, that you pay into every year while the bank still owns your house. I feel that it's easy, especially in hindsight, to pick any stock, crypto currency, or the even the average S&P return for the last 90 years and say that you can do better than your mortgage rate. There is still risk by investing and no one will guarantee you a return. 1) I don't believe that people have the true discipline to invest the same money that they would have used to pay down their house. 2) I don't believe that people, once invested and seeing power of compounding gains/interest and their money grow, have the will power and focus to not spend the money elsewhere (cars, toys, shiny things, etc) versus paying down their original mortgage debt which they were trying to outpace. 3) Debt is the modern day slavery Quote Link to comment Share on other sites More sharing options...
dq driver Posted January 20, 2018 Report Share Posted January 20, 2018 To answer the original post -- Make extra principle payments. Literally double your payment, if you can ($1600 --> $3200 month). If you have an extra $1600 a month going towards only your principle, it's incredible and pretty easy to see how quickly you'll chip away at your mortgage. +$19.2K will be knocked off your mortgage, in just a year by those extra principal payments in addition to the small amount of principal with just your typical payment Quote Link to comment Share on other sites More sharing options...
RyM3rC Posted January 21, 2018 Report Share Posted January 21, 2018 super easy to add a couple hundo every month to principle, and make an extra monthly payment each year. That should get you from a 30-year to a 23? year can't remember and too lazy to calc it again. But yeah- you never really OWN your home you're just renting it from the .gov. brb paid off home still owe .gov few hundo every month increasing until the end of time until you sell. So, why pay it off anyways? get the lowest payment you can, invest your money, and take your pile elsewhere when you're ready to retire. BOOMDONE Quote Link to comment Share on other sites More sharing options...
smokin5s Posted January 21, 2018 Author Report Share Posted January 21, 2018 funny thing is I was watching a youtube video this morning and an advertisement came on talking about HELOC loads to pay off your mortgage quicker because the interest isn't amortized... anyone with experience with it or know if it's total BS? Quote Link to comment Share on other sites More sharing options...
mmrmnhrm Posted January 21, 2018 Report Share Posted January 21, 2018 funny thing is I was watching a youtube video this morning and an advertisement came on talking about HELOC loads to pay off your mortgage quicker because the interest isn't amortized... anyone with experience with it or know if it's total BS? Was probably BS up until the tax "reform" that just passed. With all the changes to personal exemptions, the standard deduction, and how much interest can be deducted if you itemize, it could conceivably make sense for some people now. Quote Link to comment Share on other sites More sharing options...
smokin5s Posted January 21, 2018 Author Report Share Posted January 21, 2018 any more info? I honestly don't understand what the tax reform actually means (I don't trust the biased news anymore) and I don't understand how this would now make sense where it didn't before. Why would a 2nd loan against my house to pay my house off make sense? Quote Link to comment Share on other sites More sharing options...
Turbs3000 Posted January 21, 2018 Report Share Posted January 21, 2018 There's a LOT of discussions on this, try biggerpockets.com for some good info but the basic premise is that the only reason banks are willing to finance homes is because of the way homes are ammertized with heavy to all interest payments at the beginning. The interest charged/paid each month is also rather fixed. A heloc on the other hand is compounding interest daily based on the current balance. Often you can also open lines of credit at or below the interest rates on your home. So how it works is let's say you have a 150k loan you open a heloc for say 50k and take that and apply it all to the balance of the principal on the home. Then while making your regular payment on your mortgage you are putting everything extra back into paying off the 50k loan. Speed and frequency become important, things like say paying 10$ a day towards the 50k vs paying 300$ a month towards it, while the same amount one reduces the interest you'll pay in the end. Once you pay off the 50k you pull it out again and do it again. And so on til you are paid off. Eventually ending with your balance on a line and no mortgage. This allows you to be charged interest on with you actually owe vs what the amortization tables states. Sent from my SM-G928V using Tapatalk Quote Link to comment Share on other sites More sharing options...
Tractor Posted January 22, 2018 Report Share Posted January 22, 2018 Upside to HELOC is most are interest only loans, bad news is they are typically only 10 years, up to a certain Loan/Value ratio typically 80%, and once you start using one you now have to pay mortgate payment and minimum HELOC interest every month just to get by. I don't see how that would benefit anyone. Then after the 10 years if you didn't pay off either loan, say something doesn't go perfect in your life and you lose income, etc. Then you are on the hook for the remaining balance of the HELOC or refi and hope your situation, housing economy isn't in the toilet and you can refi. I wouldn't do it, nothing like just doubling down on your mortgage or not getting a huge one in the first place. I learned my lesson, now my mortgage is under $600/mo. Houses aren't worth much to me I prefer to spend my money and time elsewhere. Quote Link to comment Share on other sites More sharing options...
mrs.cos Posted January 22, 2018 Report Share Posted January 22, 2018 so when everyone says they pay over, do they pay like 100 over or do they pay the whole payment over? Also how in the world do you guys have such low mortgages? I pay almost 1,600 a month. decent size down payments? refinancing to lower interst loans? Small affordable homes? Quote Link to comment Share on other sites More sharing options...
Turbs3000 Posted January 22, 2018 Report Share Posted January 22, 2018 decent size down payments? refinancing to lower interst loans? Small affordable homes?And some are including only principle and interest while others are including principle,interest,taxes,insurance,pmi,etc in the number. Sent from my SM-G928V using Tapatalk Quote Link to comment Share on other sites More sharing options...
Sully Posted January 22, 2018 Report Share Posted January 22, 2018 A mortgage is the last thing you should worry about paying off, especially if you itemize your taxes. You get to write off the interest anyway. If you have other outstanding debt with interest, pay it off first. Quote Link to comment Share on other sites More sharing options...
o0n8 Posted January 22, 2018 Report Share Posted January 22, 2018 Interesting stuff in here Tips 1. Pay extra every month - Yes the bank knows to put it to principal 2. If your interest rate is over 4.5% get it refinanced 3. Download the spreadsheet from excel, it helps you see the impact of you extra payments If you are only looking for a lower payment, you could look into a Re-cast but that doesn't pay it off faster, just gives you a lower monthly payment. Most banks will not allow bi-weekly payments which can lead to a problem because anything not the full amount will be put to principal and you'll "miss" your monthly payment. Also, just wanted to point out most (not all) mortgages are done on a Monthly Interest calculation while car loans are done on a Daily Simple Interest. Basically, the more days between your car payments the more interest that has accrued. With a mortgage, it doesn't matter if you pay on the 1st on month and the 10th the next, the interest doesn't change. Quote Link to comment Share on other sites More sharing options...
greg1647545532 Posted January 22, 2018 Report Share Posted January 22, 2018 Put me in the "why bother" camp. My interest rate is lower than the S&P 500 gain over pretty much any 10 year period. In other words, if some bank would give me a loan for $200k at 3% interest and I could just dump that money into an index fund for 30 years, I'd be a fool not to. That's basically the situation I'm in, except they have my house as collateral and I get a place to live. Why ruin this deal? Remember that the payments you're going to be making in 22 years are going to be worth much less to you then due to inflation than double payments are now. A couple years ago I ran some numbers for refinancing to a 15 year to get a lower rate and after all the fees and some reasonable guesses about inflation it was basically a wash. Quote Link to comment Share on other sites More sharing options...
Franchi Posted January 22, 2018 Report Share Posted January 22, 2018 We did the Ramsey plan and hit the mortgage hardcore for about 3 years ( already been in the house for 5 years prior to that ) and paid ours off in Sept of 17. :-) Which was/is an amazing feeling.... Long story short, budget well every month, live below your means, and anything extra at the end of the month, throw down on top of the mortgage. ( And yes, did refin to a 15 year to lower the interest even though I knew would be paying it off significantly faster ) Just about every question asked in this thread is addressed in either the book or via the podcast too just FYI. There is lots of method's to knock it out, that's just what we did and it worked well. But I also busted my rear for those three years, both in making as much $ as could and reducing spending in drastic ways but it was well worth in the long run. Quote Link to comment Share on other sites More sharing options...
Supplicium Posted January 22, 2018 Report Share Posted January 22, 2018 First thing first is to get to 20+% equity so you are not paying PMI. I do a hand full of things: -I pay 1/4 of my monthly bill weekly (which I round up so I make an extra 100$ payment each month), Wells Fargo applies my payment when they receive it. -Make an extra payment (we try for 2 extra) a year. -My credit card earns me atleast 25$ a month in rewards that is applied to my principal each month. Quote Link to comment Share on other sites More sharing options...
Zx2guy19 Posted January 22, 2018 Report Share Posted January 22, 2018 Damn, all of this makes me question if I'm doing the right thing. I have 707k worth of mortgages on 12 properties. I pay the minimum every month and get ass hammered on interest (around 25k a year). Fuck Quote Link to comment Share on other sites More sharing options...
AngryBMW Posted January 22, 2018 Report Share Posted January 22, 2018 Interesting stuff in here Tips 1. Pay extra every month - Yes the bank knows to put it to principal 2. If your interest rate is over 4.5% get it refinanced 3. Download the spreadsheet from excel, it helps you see the impact of you extra payments If you are only looking for a lower payment, you could look into a Re-cast but that doesn't pay it off faster, just gives you a lower monthly payment. Most banks will not allow bi-weekly payments which can lead to a problem because anything not the full amount will be put to principal and you'll "miss" your monthly payment. Also, just wanted to point out most (not all) mortgages are done on a Monthly Interest calculation while car loans are done on a Daily Simple Interest. Basically, the more days between your car payments the more interest that has accrued. With a mortgage, it doesn't matter if you pay on the 1st on month and the 10th the next, the interest doesn't change. All great information here. Especially the refinance part. For the cost of a refinance with me, you will typically make up the out of pocket expense in the first year and every penny saved after that can go directly towards your principal. Damn, all of this makes me question if I'm doing the right thing. I have 707k worth of mortgages on 12 properties. I pay the minimum every month and get ass hammered on interest (around 25k a year). Fuck Shut up. You know better...especially due to your cash-flow position. -Marc Quote Link to comment Share on other sites More sharing options...
mrs.cos Posted January 22, 2018 Report Share Posted January 22, 2018 Damn, all of this makes me question if I'm doing the right thing. I have 707k worth of mortgages on 12 properties. I pay the minimum every month and get ass hammered on interest (around 25k a year). Fuck Shut up. You know better...especially due to your cash-flow position. -Marc Marc just spanked Brad i think LOL Quote Link to comment Share on other sites More sharing options...
zeitgeist57 Posted January 22, 2018 Report Share Posted January 22, 2018 Yeah, I think Brad is being cute. Pay off your mortgage quicker? Have someone else do it for you. :gabe: #rentals Quote Link to comment Share on other sites More sharing options...
Zx2guy19 Posted January 23, 2018 Report Share Posted January 23, 2018 Ha, I wasn't kidding. These mortgages make me nervous, and seeing all you guys worried about paying them off and making yourself debt free is enticing. Marc's reward for slapping me around was 2 early morning texts to "sponsor" another 210k in mortgages for me. I guess I'll be debt free when I die. Quote Link to comment Share on other sites More sharing options...
Mensan Posted January 24, 2018 Report Share Posted January 24, 2018 Ha, I wasn't kidding. These mortgages make me nervous, and seeing all you guys worried about paying them off and making yourself debt free is enticing. Marc's reward for slapping me around was 2 early morning texts to "sponsor" another 210k in mortgages for me. I guess I'll be debt free when I die. Cash flow makes you debt free. There's like 3 people in this thread with logical answers. Quote Link to comment Share on other sites More sharing options...
smokin5s Posted January 27, 2018 Author Report Share Posted January 27, 2018 debt free is always the best answer, i don't care how it gets spun. If I don't have a mortgage and I loose my job or have to take a cut in income, I don't have to worry about loosing my home as my home taxes are like a month and a half of my mortgage for the entire year so that's much easier to come up with over the course of the year. Quote Link to comment Share on other sites More sharing options...
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