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Household Finances

How long will it take me to pay off this mortgage

16 years ago

Can someone help me figure this out, please. My current mortgage is a 15 year fixed at 5% that I took out in 2003. I have been making one extra payment per year. If I continue to make that extra payment, how long will it take to pay off the mortgage? Thanks for any help-I just can't seem to figure this out and the mortgage calculators I find on line aren't helpful to me.

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Comments (9)

sparksals
16 years ago
We need to know the original loan amount, the start date for the loan, the monthly payment and when you're making that extra payment. If you provide that info, I'll figure it out for you.
liz_h
16 years ago
Also, is your mortgage company applying the extra payment to principal? They should, but I'm not sure they have to unless you so direct them. They could apply it as a regular payment, just a month early, they could even toss it into escrow I suppose. You probably get an annual statement that shows how your payments were applied.
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Comments (9)
Kasha, you are very lucky to have such a kind relative. He may be thinking about foreclosures when he asked if the total could be reduced. I agree with Barb that you should pay whatever costs your relative objects to paying. Be sure to ask him to send the payment registered mail or pay on line. We just paid off our mortgage in November and very quickly got a refund, so I think Barb is right; the banks add a little in case the payment does not go out immedidately. After paying it off, we notified our home insurance company and the county (property taxes) so that the bills will now come to us instead of the mortgage company. We are still waiting for the final paperwork, but understand that six months is not unusual. I suspect your relative would be insulted if you asked for cash to invest. Paying off your mortgage is a gift. I would not try to "negotiate" a gift! Congratulations on your good fortune!
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To pay off or not to pay off mortgage - pls check my #'s?
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Comments (38)
Hi graywings, I started reading this thread without noting the dates the posts were written. Dave, I don't want to put you on the spot, but I am wondering how the accounts you spoke of in 2007, the 72c Guaranteed Savings accounts (equity-indexed fixed life contract, or annuity contract) have weathered over the last three years. Heh... you can "put me on the spot" in this regard *ANY* time ;~) Both the equity indexed life & annuity products have *VERY* strongly outperformed the unprotected stock index markets over the same periods of time (since 2007. In fact, going back from today to almost as far as you'd like.) Their design is that they capture & credit any annual upside (to a maximum gain,) and lock that amount permanently to your credit. On any years with a downside, your account sits tight with no losses at all (guaranteed by the insured backings of the company reserves and the state's guarantee association (each state's equivalent of a regional "FDIC" in essence.) If you put $100,000 in the S&P 500 for the last decade, you'd actually be holding a bit LESS than $100,000 today (not deducting the tax or management fees that may also be applied.) The same $100,000 in an insured indexing account would be approximately $211,768, net of everything (taxes & fees,) *OR* about an average annual tax-free rate of return of 7.06% Alternatively, those folks who decided to take their working capital OUT of growth, and put it into their real estate equity, have been double-stung; Not only have they gained nothing toward retirement, their equity values have decayed from 10-30% (depending on the area.) The clients who've been with us the last 3-5 years have been rather relieved, ecstatic, and pleasantly bored, all at the same time. Its a very nice financial reality to provide. Cheers, Dave Donhoff Leverage Planner (PS. to re-paraphrase celticmoon; When everyone else's retirement nest-egg is drowning deep underwater... its kinda nice to be riding on the back of a "duck" ;~)
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Comments (13)
>>If you decide to see a financial planner, avoid the ones who spam internet message boards with their services.Mona could not be speaking of Dave Donhoff, whose input I also enjoy and respect immensely. Dave is NOT a financial planner, nor does he pass himself off as one. He is, however, very knowledgeable in his field, which is mortgages and equity - how people handle their debt, in other words. The only true financial planners are Certified Financial Planners (CFP), who specialize in estate and financial planning, either through annual fees (percentage of investible portfolio) or hourly. They are registered and licensed. No stock broker or any kind of financial advisor who is not a CFP, has any true fiduciary responsibility when handling your money. Note I said handling, not advising. You can take advice from anyone, even me or Dave. But you don't want anybody EXCEPT someone with fiduciary (e.g., legal) responsibility, to be handling your money. Many people get confused and think financial planners are those guys who give "free" seminars and then try to railroad you into buying insurance you don't need or wild'n'wacky hedge funds. But people who are the "real deal" in the CFP world don't operate that way. It isn't worth their while - most of them have minimums of at least $250K for a client's portfolio. Those are liquid funds for investing, not your house equity or stock options. And many go even higher, to $1M+ needed in liquidity before you can become a client.
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Would you chose to pay off this mortgage?
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Comments (25)
Greetings rufus doofus, There are two rats that eat your cheese. There's an agency, the partner in many of your financial affairs, that asks you a question each year, and makes a statement. The question from the income tax people: "How much did you make, last year"? The statement: "We want part of it". You can keep only that part of your income that remains after you've paid that income tax to your financial partner, the income tax people. I wasn't sure from your message whether the interest on your mortgage is deductible, or not. If not, another reason not to pay off most or all of the amount owing. The other rat that eats your cheese? When you put money into a CD, you have that guarantee that you referred to - that the guys using your money will pay back every dollar that they got from you, in addition to the rent on the money. There's another guarantee that they never mention - they won't pay one dollar more than you gave them, either. BUT - the value of each one of those dollars shrank, every year since the early 30s. When you put your money into a bank account, a money market fund, a bond or a CD ... you're not keeping the full after-tax amount of interest that the borrowing agency's paying you. You must put part of the earnings with the amount invested, in order to maintain purchasing power of those dollars. Your actual earnings are what's left. And, don't forget ... the rats eat first. Good wishes for making increasingly wise use of your income and assets. ole joyful
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alphacat
16 years ago
A silly question: Why are you accelerating payments on a 5% fixed-rate mortgage? You'd do as well by putting the money into a 5% money-market account. You can always pay off as much of the mortgage as you like if rates drop, and meanwhile you have the money available for emergencies.
debr
Original Author
16 years ago
Sparksals-thanks for the help. The original loan amount was $195,000 and the first payment was June of 2003. The principal is $1549 and escrow is $753. I currently owe $150,000. I had been adding an extra $100 to the principle each month but for the past year have been adding $200 each month and plan to continue with that amount.

Alphacat-your thought is another option, but I really want to get the mortgage paid off. If I put the extra in a rainy day fund, I'm afraid it wouldn't make it to the mortgage payment
celticmoon
16 years ago
Using those figures, Quicken sez the loan originally would have ended 4/1/18 with a payment of $1235 (seems a month too soon, but whatever).

Paying $100 extra on payments 1-24, then $200 extra on paments 25-36 (you say that $200 was "for the last year", so I'm thinking that is June 06 to May 07, Quicken sez the balance now should be 149,425 (pretty close to your 150,000). So the numbers aren't lining up exactly - depends partly on the gap between the closing and the first payment... but close enough.

If you went back to the $1549 starting with the June payment, Quicken sez you'd end September 2017 with a last payment of $976, 7 1/2 months ahead of the original loan schedule. (=11,600 less in payments in exchange for that 6,000 prepaid to date.

If you keep prepaying $200 as is your plan, Quicken sez your last payment will be in March 2016 for $1439, just over two years ahead of schedule. (= 39,000 in payments saved in exchange for the 25,000 you are prepaying over the life of the now roughly 13 year loan).

Folks will argue you should keep the mortgage and invest that $200. There are ways to have it drafted and making it hard to get to. Most certainly you should consider investing instead if you have not maxed out your tax deferred retirement options. Unlike a "rainy day" fund, tht money would be pretty hard to get to.

(And I say this as someone who did choose to prepay a 4.75% mortgage! Every situation is different.)
cheerful1_gw
16 years ago
We took out a $150,000, 15-year, 5.11% fixed rate mortgage in 2003. We threw every cent we could into additional principal payments, and it will be paid off in June of 2008. We really want it paid off as well.
debr
Original Author
16 years ago
Celticmoon, thanks for doing the numbers for me. I want to pay this thing off before I retire in 2013 so it looks like I need to speed things up a bit. The idea of saving the cash each month is certainly a good idea but my comfort zone is in paying off the house.
joyfulguy
16 years ago
There was a substantiaal discussion here a ehile ago about using Money Merge Account, with several suggesting that, rather than paying these guys a substantial amount up-front to guide you and hold your hand, you can do it yourself and go really frugal for a while, making extra payments as you go ...

... and that the $3,000.+ fee could be paid down on the principal right away, instead of to the hand-holders.

If self-discipline is more difficult than some folks can handle ... others're willing to do it for them/help them do it ...

... for a fee.

Learning how money works ... an interesting hobby - that pays well!

ole joyful
sparksals
16 years ago
ol joyful, I don't think the OP was talking about that scam of a progam. I think she just wants to accelerate payments on her own.

I do agree with you and it's a great reminder not to fall for those scams.

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