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Quickest way to pay off mortgage?

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OrganicMama
So in love with my little man!

Member since 6/08

5172 total posts

Name:
Mama

Quickest way to pay off mortgage?

What's the quickest way to pay off a mortgage? We currently send our payment monthly, but I've heard that if you split the payment and pay bi-weekly you can pay off your mortgage quicker?

Also, if over the course of the year we make extra payments towards principal (let's say a month's payment in total extra), how much time does it take off our mortgage?

Posted 4/8/09 12:37 PM
 
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ckone
LIF Adult

Member since 8/06

3014 total posts

Name:

Re: Quickest way to pay off mortgage?

Bi=weekly does help - I think it can take at least 4 years off a 30 year mortgage. A 15 year mortgage bi-weekly would really bring it down super fast.

Posted 4/8/09 12:39 PM
 

missymoo
LIF Infant

Member since 1/08

215 total posts

Name:

Re: Quickest way to pay off mortgage?

win the lotto Chat Icon

Posted 4/8/09 12:55 PM
 

enewedded
LIF Infant

Member since 3/09

272 total posts

Name:
Ellen

Re: Quickest way to pay off mortgage?

We were just in to see our mortgage our this weekend and he told us that if we make 1 extra payment a year it shaves 7-8 years off of our 30 years mortgage.

Posted 4/8/09 12:57 PM
 

hotelcalie
LIF Adult

Member since 12/05

1392 total posts

Name:

Re: Quickest way to pay off mortgage?

Posted by enewedded

We were just in to see our mortgage our this weekend and he told us that if we make 1 extra payment a year it shaves 7-8 years off of our 30 years mortgage.




One extra payment of the full monthly payment including taxes? Also how do you do it?? Pay extra?? Do I have to indicate something special?

Posted 4/8/09 1:23 PM
 

Mrs. Patticakes
SPREAD KINDNESS

Member since 9/06

17330 total posts

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Re: Quickest way to pay off mortgage?

Posted by enewedded

We were just in to see our mortgage our this weekend and he told us that if we make 1 extra payment a year it shaves 7-8 years off of our 30 years mortgage.




We were told the same and plan to do it.

I have never heard of the bi-weekly thing. So submit half on Monday and half on Friday? Chat Icon

Posted 4/8/09 2:09 PM
 

Christine
2nd verse same as the 1st

Member since 5/05

15287 total posts

Name:

Re: Quickest way to pay off mortgage?

Posted by Mrs. Patticakes

Posted by enewedded

We were just in to see our mortgage our this weekend and he told us that if we make 1 extra payment a year it shaves 7-8 years off of our 30 years mortgage.




We were told the same and plan to do it.

I have never heard of the bi-weekly thing. So submit half on Monday and half on Friday? Chat Icon



Bi-weekly is every other week. It is essentially the same as making one extra monthly payment.

Posted 4/8/09 2:16 PM
 

babymakes3
Almost there!

Member since 7/06

7376 total posts

Name:

Re: Quickest way to pay off mortgage?





One extra payment of the full monthly payment including taxes? Also how do you do it?? Pay extra?? Do I have to indicate something special?


I'd like to know this as well. I don't want to put another month's worth of taxes in if I don't have too!

Posted 4/8/09 2:44 PM
 

FranM
And so it goes....

Member since 9/05

2217 total posts

Name:

Re: Quickest way to pay off mortgage?

You dont have to put an extra month of taxes and or insurance in. You can add any amount you want to your payment as a principal only payment. Believe me your lender will have no trouble accepting your $$$.

Posted 4/8/09 3:09 PM
 

Megs4
LIF Adult

Member since 11/08

1619 total posts

Name:
Megan

Re: Quickest way to pay off mortgage?

When you send it in, do you have to indicate that this payment is to be applied to the principle somehow?

Posted 4/8/09 4:22 PM
 

Beth
The Key to your new home....

Member since 2/06

24849 total posts

Name:
Beth

Re: Quickest way to pay off mortgage?

Posted by Megs4

When you send it in, do you have to indicate that this payment is to be applied to the principle somehow?



YES

you should call your mortgage company before you just send it in- if they don't know what to do with it - it might just sit there in escrow

Posted 4/8/09 4:37 PM
 

Mrs. Patticakes
SPREAD KINDNESS

Member since 9/06

17330 total posts

Name:

Re: Quickest way to pay off mortgage?

Posted by Christine

Posted by Mrs. Patticakes

Posted by enewedded

We were just in to see our mortgage our this weekend and he told us that if we make 1 extra payment a year it shaves 7-8 years off of our 30 years mortgage.




We were told the same and plan to do it.

I have never heard of the bi-weekly thing. So submit half on Monday and half on Friday? Chat Icon



Bi-weekly is every other week. It is essentially the same as making one extra monthly payment.



This is what I thought. I misread the OP.

I actually looked up this term the other day because I swore that I had seen it used another way. Plus, our landscaper used it inproperly (so I thought) in our proposal. It actually means both! How weird is that!

bi·week·ly [ bi w?klee ]


adjective

Definition:

1. coming out every two weeks: produced or appearing every two weeks


2. coming out twice per week: produced or appearing twice a week



adverb

Definition:

1. once every two weeks: at two-week intervals


2. twice per week: twice during a one-week period

Posted 4/8/09 4:48 PM
 

Megs4
LIF Adult

Member since 11/08

1619 total posts

Name:
Megan

Re: Quickest way to pay off mortgage?

Posted by Beth

Posted by Megs4

When you send it in, do you have to indicate that this payment is to be applied to the principle somehow?



YES

you should call your mortgage company before you just send it in- if they don't know what to do with it - it might just sit there in escrow



Thanks so much!

Posted 4/8/09 5:11 PM
 

Elbee
Zanzibar

Member since 5/05

10767 total posts

Name:
Me

Re: Quickest way to pay off mortgage?

Paying it every other week (bi-monthly) will net you an extra payment at the end of the year (the "13th" payment) without really feeling the affects of a lump sum payment.

You can make one lump sum extra mortgage payment. It is more beneficial to do it in the beginning of the year (before June 1st) than later in the year, although whenever you do it reaps a benefit (reducing the principle amount, which reduces the compound interest).

Extra payments are most beneficial in the first 5-7 years, when you are paying mostly interest on your loan. Also, extra payments are most beneficial for high interest rate mortgages.

Just be aware of what your other debt is. It is silly to pay extra to a loan at 4.5% (current conventional mortgage rates) when you have $25k debt on a credit card bill at say 20% interest rate. And take into account your other investments - 401k's, ira's, etc ... can the money you are using for an extra payment be put to a better use for your future financial security. All things to take into account when figuring out if and how many extra payments to make on your mortgage.






Posted 4/8/09 5:31 PM
 

OrganicMama
So in love with my little man!

Member since 6/08

5172 total posts

Name:
Mama

Re: Quickest way to pay off mortgage?

Posted by Mrs. Patticakes

Posted by enewedded

We were just in to see our mortgage our this weekend and he told us that if we make 1 extra payment a year it shaves 7-8 years off of our 30 years mortgage.




We were told the same and plan to do it.

I have never heard of the bi-weekly thing. So submit half on Monday and half on Friday? Chat Icon



Sorry, I guess it's bi-monthly. Half on the 15th and half on the 1st.

Posted 4/8/09 6:24 PM
 

KLSbear
LIF Adult

Member since 1/06

1908 total posts

Name:
Karen

Re: Quickest way to pay off mortgage?

The idea behind paying twice a month is you are paying some principal a little sooner each month therefore reducing the interest you owe just a little sooner. Our mortgage company wants to charge us to set that up which I though was absurd. I think it was $300 for opting in to that option - no thanks! We prepay an additional amount on the principal every month - our payment coupon has a space for additional principal. By paying the additional amount we will reduce our mortgage by about half - I think the 30 yr. mortgage will be paid off in 17 years. We also save over $100,000 in interest by paying it sooner. In my mind, you're better off just pre-paying on the principal. As long as you maintain the discipline to do it regularly you'll come out ahead, and always have the option to stop the pre-payments if you find yourself in a bad spot temporarily. The calculator below will let you see the effects of prepaying various amounts towards your principal each month.

Mortgage Calculator - effect of additional payments

Posted 4/8/09 6:50 PM
 
 

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