mortage when single.. worth it ?

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posthuman

posthuman

Senior Member
#21
Jul 31, 2013
36,788
13,166
113
#21
Willie-T said:
Maybe you were asking about the second part of my post. The reason to pay it off early is because after you make a monthly payment of, say, $450...... you ALSO send in, that same month, additional money ($100 ?) that you stipulate is to reduce only the amount of your remaining principle.

This will not necessarily make the $450 payments you agreed to any smaller, but it WILL mean that your actual intrest payment will be more like $430 that next month... then $405 the next month, and so on, dropping each month (providing you keep up the extra payment)

At the end, you will not have sent in $450 every month for a full 15 years. But, instead, you will have sent in $450 a month for only, perhaps (depending on how much extra you can afford) only 14 years and t20 months.

Start doing that early, and you might pay your mortgage off (at a rate of $450 a month) in only 10 or 11 years.
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this is simply sound advice for any loan!
always pay off anything you're paying interest on as quickly as you can afford to. the longer you're making payments, the more net interest you pay.

every car i've ever bought on loan for example i've over-paid monthly statements, trying to end up with as little of my cash in the banks pockets as possible. when i shop, i look for terms i can overpay, and loans that i can pay down the principle on with overpayment.
 
Willie-T

Willie-T

Banned
#22
Feb 7, 2015
22,418
413
0
#22
posthuman said:

this is simply sound advice for any loan!
always pay off anything you're paying interest on as quickly as you can afford to. the longer you're making payments, the more net interest you pay.

every car i've ever bought on loan for example i've over-paid monthly statements, trying to end up with as little of my cash in the banks pockets as possible. when i shop, i look for terms i can overpay, and loans that i can pay down the principle on with overpayment.
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You would think things like this would be very basic, elementary, common sense things. But, you would be shocked at how many people haven't the faintest clue as to how to handle money matters. I mean, seriously! They honestly think having the high credit score they have is a good thing.
 
D

Depleted

Guest
#23
#23
Prov910 said:
^^THIS! Get a short note and pay it off.

I don't know why so many people sign up for 30 year mortgages. A 20 year note has only slightly higher monthly payments. And a 15 year note only slightly higher payments than that. I have a 15 year mortgage. The only reason it's that long is because the interest rates were pretty low when we got it—a bit less than 4%. They're still about that low today.
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I can tell you why we went for 30 years. Because we bought a house we could afford and we weren't planning on moving. That, and the interest was a tax write-off. The plan was to use what was "slightly higher" to save to fix up the house. And the plan was working for a while. We did use the money to fix it up.

Also, the idea was we were assuming our income increased every year, so once fixed up, (which we could do quicker because we could sock some money away each month), we could then put in more and more to paying off the house. And, we were doing that too.

Then worst-case-scenario hit. I became disabled, and three years later, he became disabled. Making more each year flew out the window in a hurry. Making less and less each year came slamming into us.

BUT, hey! Guess what. We also spent the old-normal on housing expense. We come from the era where people were only supposed to spend a quarter of their monthly income for housing. (Today it is a third.) When disability hit, plans changed.

We got to the point of foreclosure at one point, but fortunately (aka the Lord) worked things out that we could keep our house at the last minute. Good thing, because we are paying less now for a 3 bedroom house then it would have cost us to rent a one-bedroom apartment. MUCH less than a room in a nursing home.

We still have no plans for moving, but now that's because we can't afford to move and honestly don't even have enough strength to move, if we have to.

All told, this house gives us a way of living within our means that nothing else could have given us. So, again, why not a 30-year mortgage? We were never planning on moving, and why take out the income we could use for a house that was always going to cost us anyway? After all, when we started, our home insurance and taxes ran about a quarter of what they are now. Even after the mortgage is paid, the taxes and home insurance will cost us 2/3rds of what we pay monthly anyway.

Cost-of-living keeps increasing year after year, however once you hit disabled or retirement, your money does not. The goal was to have no mortgage by the time I retired. But you know the old saying, "Man plans. God laughs."
 
D

Depleted

Guest
#24
#24
Strangely, my father is very eccentric. (He'd be called "cheap," but only poor people are called cheap. When you're rich, it's eccentric. lol) He could afford his house cash, but he understood the downside of that. Every time he almost paid off the house, he'd get a home equity loan to make sure he didn't. Too much of a tax write-off to pay off the house.

Ends up he never did pay off the house. Instead, he ended up with Alzheimer's. He's still alive. The house needs to be reconstructed because of all the damage it received once he no longer took care of it. Ends up the house he bought for $250,000 in the 1990s, was only worth $100,000 two years ago. (Houses in his old neighborhood are worth seven-figures now.) It did what it was supposed to do -- give him a place to live and enjoy until he could no longer enjoy it.

I see no difference in a 15 year or 30 year mortgage. The people buying the house know exactly what they're getting and why, no matter which way they go. I'm not even sure I'd do 15-years, if I thought I was moving again. What for? To pay for something I won't enjoy long-term anyway? And, if I am planning on enjoying it for long-term, what's the rush in buying it when I can get a mortgage? I liked the tax write-offs. I no longer get them. (Don't pay income tax. Too broke. lol)
 
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