whostolemyprofile
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In my opinion I think it is a very good idea. You never know what the market is going to do.Just make sure they apply the extra to the principle. |
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Don S
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It is best to pay a little more than you minimum monthly paymen. any extra goes to you pricipal. |
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Practical Suzy
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Definately!! And you probably won't even miss the extra, but you'll notice it on your statement!! Good luck |
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Carlos R
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Unless you have a better use for the money, I'd say paying down the mortgage is probably a good idea. First, you're building additional equity in your home. Second, it helps prevent wasting money on other things. Third, in the long run, you will pay less interest.
I just paid off my mortgage last week. We had a 30-year loan, and we paid it off in 27 years. Every time we refinanced, we did not start the 30-year clock all over again, but we reduced the remaining term of the loan by a year or two. Feels way good to be largely debt free! |
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Heather C
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Paying more on your mortgage is always good. At least thats what I heard. If you make one extra payment each year it can really chop off some of that interest. |
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rogerv_dotcom
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Given your timeframe / plans, I'd personally switch this and instead invest extra funds. The property won't be paid off anyway. See http://www.rogerv.com/leverage.html for specific reasons why. |
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navihawk_69
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PROBABLY NOT! MAKE SURE YOU CHECK YOUR MORTGAGE AGREEMENT. IF YOU RETIRE IT EARLY, PROBABLY THERE IS PENALTY. |
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Right on
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If you can.......... pay on the Principle so the interest will go down... make sure that you tell the mortgage Company what you want to do.
When you sell this place you may want to check out a 15 year Mortgage. that's what my relative did and paid off the house in 7 years. Make sure that there is no penalty for paying it off early. |
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Mrs. Strain
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It's fine but be sure you're designating the extra payment towards principal only. |
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goodfellah_01
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if you dont plan on staying there for too long then I personally wouldnt do that. It wouldnt hurt though |
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dragonfly_quilts
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The standard answer is: as long as the interest rate on your mortage is higher than the interest you could get if you invested (or saved) that money instead, you are ahead.
The gut answer is: you'll pay off your mortage sooner and end up paying hundreds of dollars a year LESS in interest, so that's a very good thing!
This effect is especially drastic in the first years of a mortgage, when normally almost all the payment goes to interest and very little to principal. For example, I goofed and paid $90 too much one month the first year of my mortgage. That $90, applied to principal, cut more than one mortgage payment off the term of my loan! Since I don't care to work till I'm 75 to pay off my mortgage, extra principal payments are a *good* thing!
You'll also build equity in the house faster, and so when you go to sell it, you'll have more money to put towards your next house. |
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Dana H
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Paying extra can be a great thing, be sure that you tell the mortgage company that you want that money applied to the principal, not the interest |
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luvnoasis
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less interest and ask if it goes to principal or interest |
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3eleven
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I did the math on our first mortgage amortization:
$136,000 principal
$957 payment
$209,450 interest over the life of the loan at 30 years
Additional $50 per month will cut 5 years from the 30 and save approximately $40,000 in interest.
Pretty amazing how $50 saves so much |
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voandginger
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Not helping if you are only staying for five years. Refinancing would be a better option to lower your interest rate and lowering your House payment (then saving or investing the difference).
Next home, try to get a 15 yr fixed. Better route to go. Then make additional payments, making sure that it is noted that it is an extra to be applied directly to the principle. If not noted, the mortgage company can just apply the payment to the interest.
Also...PMI for loans over 80%....the mortgage company will not inform you that you have reached the 80% and no longer are required to pay PMI. You have to keep up with that yourself and request that it be removed. |
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anyone
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It would be a good idea if you were going to pay the mortgage off, but if you are going to sell in a few years anyway, overpaying won't save you very much on a thirty-year contract. |
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dreamscorporation
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debt consolidation
if someone wants to get out of debt today it is pretty easy with a debt consolidation plan
however it may get a bit tricky at times, I suggest you get as much information as possible online on this first,
a good place to start in my humble opinion is:
http://umgarticles.atspace.com/debt-consolidation.htm |
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katybeth212001
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It is a good idea because when you sell the house you want it to be worth more than you owe so that you have enough money to move over into a better home. So by overpaying, you are putting more money straight towards principle and it will come back to you in the end. |
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mcooper06
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Probably not. (Against the conventional wisdom I know, but conventional wisdom is often wrong).
If you have a fairly good mortgage (from the last 4 years it should be), let's assume you have a lending rate at under 6%.
What debt do you owe that is over 6% interest? Unless you owe no other debt or all other debt at under 6% (which is doubtful), then pay extra to the higher interest rate items.
I think the reason that everyone is on the pay extra principle bandwagon here is that assuming you keep a mortgage for 30 years you can significantly reduce the time of the mortgage by paying extra. Staying only 5 more years if you do the amort calculation you'll find it hardly worth it compared to paying off any other debt. |
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mudcat1992
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It's a very good idea. You'd be surprised how much it reduces the number of payments you have to make. Also, it builds equity in your home, it's a good way so save money and you lower the amount of interest you're paying every month. |
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Precious
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I know it's a really good idea to pay more if you are planning for a long term stay in the house. I'm not sure how beneficial it will be to you if you move in a few years. At least you have a house, I'm still in an apartment in Southern California. We can't afford any houses here. |
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Tab H
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That is a very smart idea - if you kept the 30 year mortgage you would save thousands of dollars.
You might also look into the new payment cycle - you pay twice a month - it is still the same amount per month just split up and some way it save you thousands of dollars over the coarse of the loan. |
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♥USMCwife♥
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It is always a good idea to pay a little more. Cause the extra amount goes straight to the principal♥ |
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aBranch@60-WA ,<><
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If that extra is applyed to the principal, it's a great idea.... :) |
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AMBER M
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as long as what your paying is going straight to the principle and not the interest you are doing a good thing. you will have to tell the loan company you want it to go to principle |
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dsmith68111
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Paying more is always good because you will have less interest in the long run and you could end up paying it off earlier than expected.
I admire you for being so thrifty and smart. I wish I could be like you. Good luck and god bless you. |
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knightofsappho
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If you are only staying five years, it isn't really worth it.
Take the extra money and put itnto an ingdirect cd. |
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trigen
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great idea - if you pay an amount equal to one extra payment per year you will pay off your mortgage 7 years early - but since you are not staying in your home it will look good when you apply for your new loan & you will have paid down the balance |
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Heinz M
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Excellent idea, as just a little extra a month can shorten the mortgage term drastically and save you unbelievable amounts of interest (which is the biggest part of any mortgage anyway).
Any excess in monthly payments is automatically applied to principal by the lender.
Staying for only 5 years should not make a difference in your savings, if you buy another (maybe bigger home) and continue this strategy. |
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freedomnow1950
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Just make sure the extra money goes to paying the principal. Even a little extra can make a difference in the balance owed when you are ready to sell.
Another idea would be to go to a biweekly payment plan. That way you are splitting your payments in half and paying every two weeks instead of every month. The beauty in this is that you are only charged interest on the money you pay mid month for two weeks out of the month instead of the four that you'd pay if you waited to make just one payment. Over time, this can add up to huge savings. That, coupled with the little extra you are paying could reap big dividends. Congratulations! |
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sarge927
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If you're planning to stay in a house for more than ten years it's a good idea to pay that extra against the mortgage that you talked about. In your case, however, it might not benefit you that much. You're paying mostly interest for the first 10-15 years of a mortgage, so you won't gain much ground in terms of paying off the principal balance, and you get to write off the interest on your taxes anyway. You'd be better off paying off high-interest credit cards/automobile loans or investing that money in a Roth IRA or an interest-bearing account if you need access to that money (T-Bills or CDs, etc.) |
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