Now that we are a few months into our new loan term it is time for me to start dreaming about killing the mortgage again.
As a reminder, our new loan term is 15 years (or 180 months) and our new rate is 2.75% fixed. Post-refinance, our monthly mortgage payment actually went up, although our rate went way down, about a $100 because we shortened the loan term by 6 years. Our current monthly loan payment is more than 60% principal payment, so we are already making good progress at chipping away on our principal.
If we continue to pay an extra $415 a month towards principal, which is what we have been doing the last couple of years, we will shorten our loan period by 40 months or 3+ years. We actually don't save that much in interest by prepaying on our loan because our current interest rate is so low. If we keep to this prepayment schedule of an extra $415 a month, we will save $13,500 in interest.
If we increased our prepayment to $830 a month (doubling what we are prepaying now) we will shorten the loan period by 65 months or almost 5 and a half years. Meaning that we would have the mortgage on our primary home paid off in under 10 years. Doing so would mean saving $21,800 in interest.
Having our mortgage paid off in under10 years is very appealing, but we'll have to balance that against whether it makes mathematical sense to do so and the priority of other goals.