A Boston area man submitted 62,000 pennies to make his last mortgage payment on a home he and his wife purchased in 1977. Here is a to the article link.
My first thought is kudos to him and his wife, they have their home paid off before retirement. But, my second thought is why did it take them 35 years to pay off their home. Most mortgages, especially ones obtained in the 1970s were no longer than 30 years. Which means they probably at some point refinanced their home without reducing the term. And my third thought is, I wonder how much they paid in interest over the 35 years. Surely there is something wrong with me or I've been spending too much time trying to figure out if we should refinance our primary home and whether we can get a 3 something interest rate.
We refinanced a rental and afterwards I realized I would have been better off using the money it cost for a new appraisal, title search, etc to instead apply it to the principal and keep the existing mortgage. Especially if you are trying to pay it down ahead of schedule. It all depends on how much you owe and how much of a drop in rates you can get. I am just suggesting you run the math on that scenario also. I read an article recently that you may lose in a refinance and not realize it.
ReplyDeleteThanks, yes we will run the numbers, there are calculators that you can use to show how many months it will take for a refinance to pay off (meaning the savings outweighs the amount it costs to close the loan).
ReplyDeleteI've started looking at mortgage and plan to do a better job trying to find the best rate with the best closing costs rather than being loyal to my bank (which gave us a great rate in 2009 but the closing costs were too high in my mind).
What a way to close a mortgage! As for your argument, I, too, have some thoughts. If I’m not mistaken, mortgage rates during the seventies were around 7 to 9%, with the monthly payments average at $120. They could have refinanced to have lower rates, while paying the same monthly dues.
ReplyDeleteWell, they might have had a hard time paying their monthly amortization, and that’s why it took them 35 years to pay it. But at least they were able to pay it all before they retired. If you want to refinance your home, that would be a great idea. When refinancing, make sure to choose a shorter loan than your previous loan because you can get a lower interest rate that way. If you have short term mortgage, just make an extra payment every month to pay off your home early.
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