Paying Extra on Mortgage

[Jodi1980]

Is it a really good idea to make 13 payments a year instead of 12?

 

[Toby'sFriend]

That depends on whether you have other debt that should be paid off first and also whether or not your retirement and other savings plans are being funded.

 

[gina2000]

I don't have any stats but it cuts down on the interest and the length of the loan. Considering you pay far more interest than principal over the life of the loan, I would say it's a good thing unless you need the deduction against your income.

 

[nativetxn]

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[janette]

Like Toby'sFriend said it's all in your other financial picture. If the home is the only debt than yes but other investments should also come first. Mortage are the cheapest form of interest and sometimes it is better to put money into other savings instead of making extra payments.

Example: You are only putting 10% in 401k instead of the max of 15%. That extra 5% maybe better to put in your 401k, you will get the difference in your taxes and the interest earned vs the interest you save on your mortage payments in the long run.

 

[luvtogo12]

As explained to my by my mortgage broker and realtor, making one extra payment per year takes 5 years off a 30 year mortgage.
I always send in extra each month to be applied toward the principal only.

 

[DVC-Don]

We send in an extra $100 per month.

 

[Serena]

All you have to do is send extra and make sure it's applied to your principle.

You don't have to make an extra payment, you don't need to do the twice a month thing, and you don't have to pay a fee for the benefit of paying them extra.

Just apply it to the principle, and it won't cost you anything extra, you don't have to do any tricks or anything like that.

 

[Lynn CC]

When I was just 20 years old and we were building our house, I got the BEST advice of my life. Someone told me to pay double your principle each month and it would take a month off the end of the loan each time. We went a step farther......

We paid an extra $500 a month (added to the principle of the loan), and our 30 year mortgage was paid in 15 years!

If you can afford it each and every month, then I would suggest this over one extra payment each year. You'll save thousands in interest payments.

Has anyone else done this?

 

[Princess_Aurora]

We were told the fastest way to pay off our mortgage was to pay half every two weeks and because some months have an extra week in it, that makes an extra payment each month and then make on extra monthly payment a year (it was suggested around your birthday or somthing that you would remember so it would be the same time every year) and that would get it paid off like ten years sooner.

 

[taryntwo]

We made double payments and paid off our 15 year mortgage in just under 8 years. It makes life very easy without a mortgage. With two in college this year it really helps. If you have the extra cash I recommend doing it.

 

[shep]

I think an extra payment a year will make a 30 year loan take 22-23 years and on a 15 year loan will make it take 11-12 years.
We pay every 2 weeks also..

 

[adamak]

I always pay extra each month, and send in an extra month at the end of the year. It helps me. When we sold our apartment (only lived there for 4 years), I was surprised at the equity I have. It's the best investment I ever have.

Of course if you have consumer debt, then pay those off first. We paid off our DVC first also.

 

[Doctor P]

Don't pay anyone to set up a special program for you, but paying down the mortgage can be a good deal if you currently have private mortgage insurance. Generally, mortgage debt is lower interest than other debt and is generally tax deductible, so the efficacy of paying it down depends on a lot of factors including interest rate, term of loan, your age, and how long you expect to stay in the house. I agree with others who would place a priority on tax deferred retirement savings, other things equal.