Wednesday, July 28, 2010


We have been thinking more and more about putting more effort into paying down the mortgage on our primary home.

First if we pay off our mortgage we will have killed our biggest and last remaining personal debt (mortgages on our investment properties are business debt). Second, if we pay off our mortgage we will have flexibility regarding hazard and wind storm insurance which are extra expensive here in South Florida. Third, paying off our mortgage gives us a known return vs. an unknown return in our investments which with the market being so sporadic has certain advantages.

I am not planning to abandon our current 2010 spending and savings plan, but just thinking more about how we can put extra money, beyond our savings plan, towards our mortgage principal. I am also thinking more about our 2011 savings plan and other options for paying down our mortgage at a faster rate (extra payments, bi-weekly payments, mortgage debt snowball). I have also been looking at accelerator loans after hearing about them recently on NPR, but I really am not a fan of taking on a loan to pay off a loan.

How about you, have you paid off your mortgage at a faster rate? If so, how have you accomplished this task?


Anonymous said...

I just read an article on WSJ about people putting money in to refi their mortgages to get lower interest rates and shorten the term since the alternative of investing in the stock market seems so uncertain.

After reading that article, I started looking at refi options and 15 yr mortgages are at all time lows. I am in the process of refi'ing our mortgage from a 30yr at 4.875% which we just got last yr and thought was great, to a 15yr at 3.75%. For an extra 35% each month we'll pay our house off in half the time. This rate seems unbelievable to me, but we just locked it in and I'm really excited about having each mortage pmt mainly going to paying down principal compared to interest in the past.

Anonymous said...

I found an online mortgage extra payment calculation website and played with different extra payments. I discovered I can pay off my mortgage comfortably in 6 years and still have funds for other needs. So I started it last month. While the economy is slow and stock market bouncing around and savings accounts paying low rates it is probably a better use/return on my funds to pay down the mortgage. If inflation kicks back up it may not make sense to pay the extra amounts. I am not sure it pays to refinance, you can use the cost of the refinance to jump start the pay-down and maybe come out ahead.

SJ said...

At 24, I am wondering if I am going to be forced to move out of my home state in order to afford a house. H and I have stable jobs with good pay (~80k) but the average price for homes in our area is more than 3 times our combined salary. Even with a 30% downpayment the mortage + taxes will be nearly $2k/month plus extra expenses. Any advice for the young future homebuyers?