Does it makes sense to make extra mortgage payments...

Hi,

We just recently bought a house and are debating whether or not we should pay an additional 1/12 of our mortgage payment per month to reduce our principle.

Is it smart to do this if we plan on selling in about 8-10 years? We don't expect this to be our forever home so we aren't sure if we should bother making extra payments and reducing the life and cost of the loan.

THX!

Re: Does it makes sense to make extra mortgage payments...

If you pay ahead of time, in 10 years, you'll have that much more profit, and that much less interest that you've paid. IMO, it's always a good idea to pay down the mortgage earlier. No matter when you sell, it's always going to mean more money in your pocket.

Re: Does it makes sense to make extra mortgage payments...

Yes! You'll pay off your mortgage much quicker because a lot of your mortgage payment goes to interest. If u pay off the mortgage sooner, you'll have less interest to pay and will take years off of your mortgage.

Re: Does it makes sense to make extra mortgage payments...

YES! we are in year one of our mortgage and had we not paid the 1/12 extra monthly, we would have only paid about $500 in principle- and then everything else went towards interest- instead we are at 3 times that, which is equity or money in our pockets

btw, we only plan on staying for 5 years but still want as much money as possible of the principle repaid.

Re: Does it makes sense to make extra mortgage payments...

There are calculators online that will show you how much you will save over the life of the loan by making on extra payment. On my mortgage, making one extra payment a year cuts my 30 year mortgage down by about 9 years and saves me close to $80,000 in interest. So yes, make that extra payment if you can! You won't feel like it is making such a huge difference now since you are new in your mortgage, but if you plan on staying for a while, its worth it. even if you don't plan to stay for very long, it is that much more equity you will have in the house when you sell and will be able to take to the table when you purchase your next home.

Re: Does it makes sense to make extra mortgage payments...

Yes it does. But don't pay extra fees to the bank to have them pull out that money for you. Just figure out 1/12 yourself. I know some banks have a program you can sign up for but they charge fees for it.

Re: Does it makes sense to make extra mortgage payments...

it all depends on how much left over money you have every month. if you're not able to put money in savings, or to do house repairs, then i would save that extra payment for that. if you have plenty left over, then why not eat away at the principle.

Re: Does it makes sense to make extra mortgage payments...

absolutely make the extra payment if you can afford to do it!!!!

our mortgage broker is a good friend of ours and he did the math for us.....if we pay what he told us to pay we will pay off the 30 year mortgage in 19 years!!!!!!


its not that much extra each month but in the long term it means soooo much

we plan on staying in this house forever but even if you plan on moving in the next 5 -10 years any extra will go directly to principle and really impact your investment in the house

Re: Does it makes sense to make extra mortgage payments...

we plan on taking one payment from any tax money we get back and give it principal yearly even if we could use it on home improvement. We figured what is left over monthly will go to improvement/savings fund, tax refunds will go to mortgage (the stim. tax refund is just going to savings never to be touch - emergency fund.)

Re: Does it makes sense to make extra mortgage payments...

Re: Does it makes sense to make extra mortgage payments...

Definitely!!