Pay off your mortgage faster and save 50k on a 100k house

[csedwards2]

I dont know this cat from Adam, but this is a quick video that shows in a scenario how you can easily take an 100k mortgage, and pay it off faster, and save yourself 10s of thousands of dollars in interest.

I ran the numbers for me.

If I were to buy a 100k house @ 5%
 My payment would be 537 on avg every month. (of course not including taxes, pmi, yada yada)
If I paid 268, bi-weekly, you make one extra payment every year, but what I really want to do is

pay $1000 a month ($493) extra
and I would not only pay off the 30 year mortgage in just over 11 years, I would also only pay 28k in interest (saving $$$$62, 0000) versus 90k in interest  for making minimum payment


Something you always knew, but its just nice to put it into perspective one more time and realize this is a truly doable plan. I know we dont have the finance forum anymore, but please consider if you havent already

How To Buy Your $100K House For $50K Less !!

[phbrown]

maybe I'm missing something


normally isn't the principal the 100k?

and You always pay back the principal plus interest right?

so how can you pay back a loan for less than the principal for the loan? no bank would make money if they loaned you 100k and only got 60k back.


now if you are saying it is 100k over the life of the loan meaning the principal plus 30years of interest at 5% equals 100k then yeah you can pay less in interest by making extra payments towards the principal.

[phbrown]

i just reread your post and now I understand what you are saying


If you make the extra payments as you planed you would only pay

$128,000 for your $100,000 house

where as if you only paid the required amount you would pay

$190,000


So by making extra payments you don't have to pay the additional $62,000 dollars in interest....



disclaimer I did not use any type of loan calculator hopefully i understood the OP's post correctly

[csedwards2]

maybe I'm missing something


normally isn't the principal the 100k?

and You always pay back the principal plus interest right?

so how can you pay back a loan for less than the principal for the loan? no bank would make money if they loaned you 100k and only got 60k back.


now if you are saying it is 100k over the life of the loan meaning the principal plus 30years of interest at 5% equals 100k then yeah you can pay less in interest by making extra payments towards the principal.

right, the interest on the 100k at 5% is like 93k, which is bananas. 93% interest of the life of the loan. Robbery. The savings come in the interest if paid on accelerated schedule

[csedwards2]

you got it

[phbrown]

you got it

ok cool


i wonder how long before mm or fs posts....

[LyricTenor]

Early payoff affects one's property taxes...or something quite a bit, correct?

[csedwards2]

I would like to know how. Maybe LL will slide through

[lordluvr]

Test...

[lordluvr]

My browser has been acting up all day.  Looks like my response can finally go through.  To answer the question, no.  Property taxes aren't affected by paying off the loan.  You're probably thinking income taxes.  When you have a mortgage, you have the opportunity to itemize deductions and include your mortgage interest in the deductions.  When you pay off that loan, there is no more interest deduction.  The lack of deduction will impact your taxable income.

[Mysteryman]

Lord willing I'm looking to pay off mine in the next 5 years.

[csedwards2]

My browser has been acting up all day.  Looks like my response can finally go through.  To answer the question, no.  Property taxes aren't affected by paying off the loan.  You're probably thinking income taxes.  When you have a mortgage, you have the opportunity to itemize deductions and include your mortgage interest in the deductions.  When you pay off that loan, there is no more interest deduction.  The lack of deduction will impact your taxable income.

thats what I figured.

[vtguy84]

This is correct.  When I meet with clients regarding protecting their mortgage....I go over handling biweekly payments and how it will cause them to pay their mortgage off a lot faster!

[phbrown]

Lord willing I'm looking to pay off mine in the next 5 years.

not exactly what I thought you were going to say...but close enough