2013- Extra payments towards principal thread

[BeachLove]

I'm hoping to put more money towards the principal on my mortgage this year. Anyone else in for 2013? My goal is $3000 by Jan 2014.

Jan $150
Feb
Mar
Apr
May
Jun
Jul
Aug
Sept
Oct
Nov
Dec

 

[gracie1]

So far I have only been able to do $10-$20 a month more on my mortgage, but my plan is to be able to start paying extra on my home equity loan starting in July!

 

[Muushka]

It is a great goal and it works.

We did all sorts of calculations. 100 (per month) extra, 125, 150.... some were too low (didn't bring the principal down enough and some were too high (the extra payment over $200 didn't make that much difference)).

Our 'sweet spot' was $200 a month, YMMV

Oh, and as an added bonus, twice our mortgage company lowered our rates at no cost to us. We didn't even ask them too!
They said that at the rate we were going, they were afraid to lose us as customers. So we did the refi, but paid like we hadn't refinanced and that brought it down even faster.

We paid off the house 2 years ago!

 

[Deb & Bill]

I'm hoping to put more money towards the principal on my mortgage this year. Anyone else in for 2013? My goal is $3000 by Jan 2014.

Jan $150
Feb
Mar
Apr
May
Jun
Jul
Aug
Sept
Oct
Nov
Dec

Will your mortgage company allow a biweekly payment? That means you pay 26 times half the mortgage cost. And it winds up being one extra payment a year. Which reduces the length of your mortgage a lot.

 

[jessicaerv]

We've been paying a little extra monthly for as long as I can remember (7 or 8 years probably). We have just been rounding up to the nearest $100; sometimes that means we're paying $65 - $75 more a month, other times it might be only $20. But every little bit counts!!

Great goal, and best of luck!!!

 

[pixiechick]

It is a great goal and it works.

We did all sorts of calculations. 100 (per month) extra, 125, 150.... some were too low (didn't bring the principal down enough and some were too high (the extra payment over $200 didn't make that much difference)).

Our 'sweet spot' was $200 a month, YMMV

we did the same thing, and I still rerun the numbers occasionally. We're nearing college tuition and are taking that into account as well.

Last month, we tacked on an extra $800. We had some Christmas gifts and decided that instead of doing anything for our anniversary, we would put the money towards our payment.

This month it will be much less. My car needed some work, we bought APs, and we know we will need some money for kitchen updates.

 

[busy mom]

Try this calculator - you can see how adding extra money to your monthly payments will impact your bottom line:


http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx

 

[ohmslaw]

Watch your statements. Some mortgage companies put any extra you pay as prepayment of the next months payment and not prepayment of principal. You might need to contact them and tell them that any extra goes towards principal and not the next payment. Or send a separate check with the principal amount with "principal prepayment" in the memo line.

As for the bi weekly, make sure that the biweekly payments are applied when received and not just held until the second biweekly payment is received to make a total payment, otherwise you are not getting any benefit.

 

[Karlzmom]

It is a great goal and it works.

We did all sorts of calculations. 100 (per month) extra, 125, 150.... some were too low (didn't bring the principal down enough and some were too high (the extra payment over $200 didn't make that much difference)).

Our 'sweet spot' was $200 a month, YMMV

Oh, and as an added bonus, twice our mortgage company lowered our rates at no cost to us. We didn't even ask them too!
They said that at the rate we were going, they were afraid to lose us as customers. So we did the refi, but paid like we hadn't refinanced and that brought it down even faster.

We paid off the house 2 years ago!

How nice for you! We can't even get our company to discuss a rate reduction as we are underwater, have a perfect payment record and in the "doughnut hole" of the various "programs". Sooo we continue to pay the 6.5% and look forward to the day I can dump my lender [who got a bucket load of taxpayer money along the way] and never look back. We are slowly paying ours down to see if we can get back on level ground again. The real kicker is the money lost on the deep sea dive was ours, as we put alot of cash into the house! Anyway, just wanted to share in your happy for a moment....

 

[Tink-n-MrIncredible]

I'm hoping to put more money towards the principal on my mortgage this year. Anyone else in for 2013? My goal is $3000 by Jan 2014.

Jan $150
Feb
Mar
Apr
May
Jun
Jul
Aug
Sept
Oct
Nov
Dec

That is great that you have made your self a goal. Hopefully you will be successful.

 

[Tink-n-MrIncredible]

So far I have only been able to do $10-$20 a month more on my mortgage, but my plan is to be able to start paying extra on my home equity loan starting in July!

Just my 2 cents. Something for you to think about when you can pay extra. Take your p&i just say it is $300 a month. Divide that amount by 12 and you would get $25. Try and make that your goal for monthly payments. That way at the end of the year you have made at least one extra payment. If you can do more than that amount even better. Good luck and any extra you can apply is great.

 

[mrsheppo]

I generally try to add at least an additional $175 a month to my payment. This averages out to an additional 2 1/2 payments a year on our mortgage.

 

[seasheller]

We have paid off two houses this way.
Make sure your loan has no prepayment penalty. We ask for an amortization schedule which will list how much is applied to principal and interest each month. At the beginning, hardly anything is applied to the principal. Make your regular monthly payment, plus add up the next month's principal for how many months you can afford and add that - indicating on the check that this is "extra principal payment". We would add as many months as we could in the beginning of the loan, and at the end probably only one month of extra principal. You avoid all of the interest for those months where you paid the extra principal. The first house was a 15 year loan that we paid off in 8 years, the second one (much later in life) we paid off in three years because it had an interest rate that would balloon in 7 years. I know this isn't feasible for everyone, but it worked well for us.

 

[patsal]

Just chiming in to say keep up the good work. We did this and completed our 30 year mortgage in 14.5 years. It was so worth putting every extra penny on the principal. I started out with $10 extra the first year, and added an additonal amount every year, I think it looked like this:
year:
1 $10
2 $30
3 $60
4 $100
5 $150
6 $210
7 $280
8 $360
9 $450
10 $550
11 $660 This is where I hit the most I could add without feeling strapped so I just left it here for the next 3.5 years. I could have cut off more if I could have stretched the money further, but there was just no way.

 

[MinnieLovesMickey12]

My husband pays an extra $500 a month to our mortgage payment and our house is scheduled to be paid off in 4 years, when my husband is only 40 years old.

We paid both our cars off last year and DH put part of that money towards extra principal payments in order to get the house paid off really quickly.

It will be so worth it in the end when we are debt free at 40 years old.

 

[amcnj]

Remember to look at your entire debt picture. Mortgage rates are extremely low, and paying higher rates for things like auto loans, student loans, credit card loans , etc, might make paying them off first more beneficial. Of course if your only debt is the mortgage, there can be great satisfaction in seeing that debt reduced quicker and even more so when it is paid off. As mentioned previously, make sure any extra is applied to the principal and there are no prepayment penalties. Doing it this way as opposed to signing up for a plan like the biweekly one allows you to vary the amount or suspend it during periods your funds are needed elsewhere. Your bank may also let you set up some automatic deduction each month of a base extra amount, and months you want to add more you can do so too.

 

[mks18412]

This is a great idea!! I have been paying extra on my principle for awhile now. I give myself a yearly goal, this year its around the $20k mark hopefully more. I hope to have my house paid for by the time I am 38 at the latest.... Good Luck & We can do this!!!

 

[Nebraska_Disney]

I refinanced our loan (again) this past summer to an interest rate of 2.65% on a 15 year note. Considering my first house, 12 years ago, had a 30 year rate of 7.5%, this is an incredibly cheap loan. I pay very little extra each month and started maxing out my contribution and my wife's contributions to our Roth IRA's. Pay yourself first, make sure you have at least 6 months of cash on hand and then decide to do what is best with the "extra" money you have. Depending on the interest rate on your loan, it may not be the "best" choice.

 

[mks18412]

I refinanced our loan (again) this past summer to an interest rate of 2.65% on a 15 year note. Considering my first house, 12 years ago, had a 30 year rate of 7.5%, this is an incredibly cheap loan. I pay very little extra each month and started maxing out my contribution and my wife's contributions to our Roth IRA's. Pay yourself first, make sure you have at least 6 months of cash on hand and then decide to do what is best with the "extra" money you have. Depending on the interest rate on your loan, it may not be the "best" choice.

Great point! Its very important to pay yourself first.

 

[QVCshopper]

We did this for our house, paying extra every month. When we got down to a certain amount, we paid off the balance. That was nearly seven years ago, and it has been great living without that payment.

But now, we are debating moving (bigger house, better schools), so we are looking at another mortgage payment unless we can save tons between now and then. No mortgage really makes you not want to move even if you should, if that makes sense.