Money Matters
MommyLiberty5013
member
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Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Yes! Just made a...
decently-sized p-only payment to our mortgage!!! Feeling a bit lighter!
Re: Yes! Just made a...
My H and I bought our house a little over a year and a half ago with a 30 year mortgage. We hope to pay it off in just over 15 years. We just upped our principal only extra monthly payment to $400 in November. Our goal is having the house paid off by the time we are 50 (we are 36 now).
Related topic - how aggressive is everyone about paying their mortgages? We always pay extra but it will shave a 30 year down to about 28, not a 30 year down to 15 or 10. If you're super aggressive what's your main reason?
I'm the same way about a lot of things! If I'm at a restaurant and paying with a credit card, I'll write the tip with change in it so my total charge is an even number, like $25 or $40.
This is one of those topics where I DON'T practice what I preach. For most people, I think it is awesome to put extra money to principal. Especially in the early years of the loan. It is astounding how much time that will cut off a loan, especially a 30-year one.
However, for me personally, paying down my mortgage faster than I need to does not coincide with my own financial goals. I focus my extra money on paying down my HELOC, to turn around and use it again as a down payment on another investment property.
After my growth phase, I will switch to "pay down" phase. But I'll pay my other mortgages first because they have a higher interest rate. Understandably, the mortgage on my personal home is the cheapest money I have. It's last on the list.
The other reason I'm not very motivated to pay off my mortgage is half my payment is all the escrows for insurance and taxes anyway. All the stuff I'll still have to pay, even if I didn't have a mortgage. So it wouldn't even feel all that "freeing" if my mortgage payment disappeared.
We just refinanced from a 20yr to a 15yr. We've paid off about $40k of the principal since we bought the house 3 years ago. Partially from the rounded payments. We also take every third check my wife gets and toss it at the mortgage. Plus, when we refinanced, they sent us all kinds of checks, we transferred it back to principal as we considered it money already paid. Plus they stopped taking automated payments during the refi, we transferred that money too. Plus the just mentioned end of year extra payment. We're a year ahead on the loan and we've only had it since April.
I think this year will be the first year we've paid so little mortgage interest that we'll be getting the standard deduction. So at that point, there's not even a tax benefit for us to not pay off the mortgage faster. Although, personally, the tax benefit is nice to have if you're paying the interest, not a reason to not pay off the mortgage faster.
We focused on all of our non-mortgage debt first, then started higher retirement savings, then worked at paying off the mortgage simultaneously. We had a 15 year mortgage so we knew for sure it would be paid off in 15 years even if we didn't pay extra. Our original timeline was to have the mortgage paid off in 7 years. Once we received an inheritance we dumped that toward the mortgage and finished it off. I can't even explain how amazing it feels to no longer have a mortgage. It's a weight lifted that I never knew was there.
TTC since 1/13 DX:PCOS 5/13 (long, anovulatory cycles)
Clomid 50mg 9/13 = BFP! EDD 6/7/14 M/C 5w6d Found 11/4/13
1/14 PCOS / Gluten Free Diet to hopefully regulate my system.
Chemical Pregnancy 03/14
Surprise BFP 6/14, Beta #1: 126 Beta #2: 340 Stick baby, stick! EDD 2/17/15
Riley Elaine born 2/16/15
TTC 2.0 6/15
Chemical Pregnancy 9/15
Chemical Pregnancy 6/16
BFP 9/16 EDD 6/3/17
Beta #1: 145 Beta #2: 376 Beta #3: 2,225 Beta #4: 4,548
www.5yearstonever.blogspot.com
Our tax rate is high enough that the tax break is also huge for us. Our house is a 4 bed/3 bath house in a good school district with a half acre of land. We pay about $50/month more than we were paying in rent 3 years ago for a 2 bed/2 bath apartment.
I've actually thought about doing a cash-out refi or using a HELOC to pay off some student loans. We can deduct the mortgage/HELOC interest, but our income is too high to deduct student loan interest.
This is not our forever house. I intend to retire without a mortgage, but H and I aren't super inclined to retire early. We would like to be financially independent in our 50's, but we both enjoy work.
We aren't that aggressive. We have a 30 year mortgage that started out with a $140,000 principal balance. We started putting an extra $200 principal payment on the mortgage in September. Our normal principal payment is somewhere around $200 when we pay the mortgage and it just looked so sad and pathetic so we started putting extra on it.
If we were staying in our house then I'd start aggressively paying it off. DH and I use my income solely for savings now that our other debt is paid off so my take-home would start going 100% towards mortgage payoff and I think we could have it knocked out in 6 years that way. It wouldn't hurt our current savings at all. We are both contributing the federal max to our 401ks and we wouldn't change that. We'd have to make the decision if we'd want to cut out around $1000 a month though to save up for IRA contributions though and that would definitely affect the 6 year timeline.
DH and I had another serious conversation about selling last night and I think we're going to give our house one more year which should be enough time to wrap up our smaller projects and have a year of no big projects (like replacing the siding or doing major landscaping) so we can save up the 20% downpayment we need.
My mortgage was only about $60K when I bought my house, so the loan part of my payment is only $390. It took about 3 years for the part going to my principal to reach the $100 mark. It was really so sad. I was super excited when it finally crossed the $100 threshold, lol. I think I'm at a whopping $102 going to principal now.
On a slightly different topic, I am anxiously awaiting my annual escrow review and re-adjustment of my mortgage payment. The big change last year is I'm no longer in a flood zone, so I'm no longer required to carry flood insurance.
My bank has already sent me a couple letters that they will no longer be escrowing my flood insurance, but it hasn't taken effect yet. I'm assuming that is all going to be figured out with the annual escrow review.
I'm still keeping the same flood insurance, but hate the whole escrow system and am much happier paying it myself and having my mortgage payment drop. Possibly by a decent bit, if they also have too much money in that specific escrow account. Waiting, waiting, waiting...
I guess we are aggressive in paying our mortgage down. Paying $200 extra towards principal a month saves us close to 30k in interest over the life of the loan and we pay it off in just under 18 years. Upping the extra payment to $400 saves us another 9k in interest and we pay it off in under 13 years. The savings in interest alone make the extra payments worth it to us. We are trying the higher extra payments out, but if we are stretched too thin that way we will drop it back to the sweet spot of $200.
Our mortgage interest rate and 401k interest rate are averaging close to even right now, so no major benefit.We both contribute 15% (plus employer match over that) to our Roth 401ks, and are currently saving another $700/mo in various savings accounts (building our e-fund back up, saving for a new car, building up our house fund for projects/inevitable expenses like new roof/appliances, vacation fund, etc). We don't max out our Roth 401k contributions because that would be over 40% of our gross and we just can't afford it.
We are interested in finding other ways to invest our extra money, but haven't found a financial planner that has been able to offer options for us. So far everyone has just said we are doing better than most people our age/salaries and to keep it up. We gross just over 80k/yr combined now.
I just plugged some numbers into HR Block, and it says we owe $650. There's a list of stuff I haven't added in yet (in-kind donations, etc.) that will drop this.
I figure if I can get it within $200 that's going to be a victory.
My H withholds as a single, and I withhold married 0 + $100 per pay period.
We know we need to adjust our withholdings even more since I'll be coming home. Losing my income will bump us into a lower tax bracket plus we'll add another dependent this year. However, this year we'll have a total of about 6 months of my income. So that will keep us in our current tax bracket for 2017, but only by $4k. We seriously ran the numbers to see if we'd be better off having me take my leave a couple weeks before baby is born so when I come back and give my 2 week notice, we won't have enough of my income in the year to be in the 25% tax bracket and be in the 15% instead.
It's going to be suuuper close.
TTC since 1/13 DX:PCOS 5/13 (long, anovulatory cycles)
Clomid 50mg 9/13 = BFP! EDD 6/7/14 M/C 5w6d Found 11/4/13
1/14 PCOS / Gluten Free Diet to hopefully regulate my system.
Chemical Pregnancy 03/14
Surprise BFP 6/14, Beta #1: 126 Beta #2: 340 Stick baby, stick! EDD 2/17/15
Riley Elaine born 2/16/15
TTC 2.0 6/15
Chemical Pregnancy 9/15
Chemical Pregnancy 6/16
BFP 9/16 EDD 6/3/17
Beta #1: 145 Beta #2: 376 Beta #3: 2,225 Beta #4: 4,548
www.5yearstonever.blogspot.com
Wow. I had idea my 2-liner would prompt so much convo!!!
Our mortgage is our only debt. We have an awesome rate (3.5% fixed), but we just want to lessen the amount we will owe over time. We tossed around the idea of a 15 year in the summer when we bought this place, but did the 30 year instead with the intent to pay it off aggressively. We also make a 13th payment every year and we pay $100 per month extra to principle only. DH got a huge pay raise this year due to a new contract being negotiated with the pilots, and he got all the back pay as well HAD they had this contract in force two years ago when contract negotiations first began. This back pay went to the mortgage and to two charities.