Can splitting mortgage payment help you shave 10 years from 30 year loan?

[patientlywaiting]

Rustico, I think that most people would benefit from paying down (and eventually off) their mortgages.

1) For peace of mind.
2) So they don’t spend the money on something else.
3) Keeps them on a monthly routine they are used to. There’s a comfort level in regularity.

The reason so many people are in trouble today is that they accessed all their equity using the new “innovative” products and spent it all.

Of course, more sophisticated owners/investors who can manage their money well can place their funds in place that return more than the mortgage. Mortgage money is subsidized in many ways so it’s cheap money. You can earn more in other places.

I would not refinance my 5% mortgage unless the interest rates go down. There are cost associated with refinancing. I’d just as well continue to pay it down.

Some business people take risks with their equity money. In a booming economic, the risks are worth taking, but in a recession, even equity millionaires end up on the street. It’s a fact of life.

I’m all for treating the primary residence as a home (consumption) rather than an investment. Any appreciation is gravy when you sell the house.

[patientlywaiting]

Rustico, I think that most people would benefit from paying down (and eventually off) their mortgages.

1) For peace of mind.
2) So they don’t spend the money on something else.
3) Keeps them on a monthly routine they are used to. There’s a comfort level in regularity.

The reason so many people are in trouble today is that they accessed all their equity using the new “innovative” products and spent it all.

Of course, more sophisticated owners/investors who can manage their money well can place their funds in place that return more than the mortgage. Mortgage money is subsidized in many ways so it’s cheap money. You can earn more in other places.

I would not refinance my 5% mortgage unless the interest rates go down. There are cost associated with refinancing. I’d just as well continue to pay it down.

Some business people take risks with their equity money. In a booming economic, the risks are worth taking, but in a recession, even equity millionaires end up on the street. It’s a fact of life.

I’m all for treating the primary residence as a home (consumption) rather than an investment. Any appreciation is gravy when you sell the house.

[patientlywaiting]

Rustico, I think that most people would benefit from paying down (and eventually off) their mortgages.

1) For peace of mind.
2) So they don’t spend the money on something else.
3) Keeps them on a monthly routine they are used to. There’s a comfort level in regularity.

The reason so many people are in trouble today is that they accessed all their equity using the new “innovative” products and spent it all.

Of course, more sophisticated owners/investors who can manage their money well can place their funds in place that return more than the mortgage. Mortgage money is subsidized in many ways so it’s cheap money. You can earn more in other places.

I would not refinance my 5% mortgage unless the interest rates go down. There are cost associated with refinancing. I’d just as well continue to pay it down.

Some business people take risks with their equity money. In a booming economic, the risks are worth taking, but in a recession, even equity millionaires end up on the street. It’s a fact of life.

I’m all for treating the primary residence as a home (consumption) rather than an investment. Any appreciation is gravy when you sell the house.

[patientlywaiting]

Rustico, I think that most people would benefit from paying down (and eventually off) their mortgages.

1) For peace of mind.
2) So they don’t spend the money on something else.
3) Keeps them on a monthly routine they are used to. There’s a comfort level in regularity.

The reason so many people are in trouble today is that they accessed all their equity using the new “innovative” products and spent it all.

Of course, more sophisticated owners/investors who can manage their money well can place their funds in place that return more than the mortgage. Mortgage money is subsidized in many ways so it’s cheap money. You can earn more in other places.

I would not refinance my 5% mortgage unless the interest rates go down. There are cost associated with refinancing. I’d just as well continue to pay it down.

Some business people take risks with their equity money. In a booming economic, the risks are worth taking, but in a recession, even equity millionaires end up on the street. It’s a fact of life.

I’m all for treating the primary residence as a home (consumption) rather than an investment. Any appreciation is gravy when you sell the house.

[cr]

This is the second thread on essentially pulling a fast on one the bank in the form of “interest management”. I’m no expert but I’d bet my last dollar banks have thought of and insultated themselves from any opportunity of losing interest that can be schemed up.

Save for revoloving half a million dollar debt between first year zero interest rate credit cards for 30 years, I can’t imagine any legal or non-pain-in-the-ass way around it.

Just take out a 15 year loan. Lower rates, and truly pay it off in half the time, with a ~35% higher monthly payment.

[cr]

This is the second thread on essentially pulling a fast on one the bank in the form of “interest management”. I’m no expert but I’d bet my last dollar banks have thought of and insultated themselves from any opportunity of losing interest that can be schemed up.

Save for revoloving half a million dollar debt between first year zero interest rate credit cards for 30 years, I can’t imagine any legal or non-pain-in-the-ass way around it.

Just take out a 15 year loan. Lower rates, and truly pay it off in half the time, with a ~35% higher monthly payment.

[cr]

This is the second thread on essentially pulling a fast on one the bank in the form of “interest management”. I’m no expert but I’d bet my last dollar banks have thought of and insultated themselves from any opportunity of losing interest that can be schemed up.

Save for revoloving half a million dollar debt between first year zero interest rate credit cards for 30 years, I can’t imagine any legal or non-pain-in-the-ass way around it.

Just take out a 15 year loan. Lower rates, and truly pay it off in half the time, with a ~35% higher monthly payment.

[cr]

This is the second thread on essentially pulling a fast on one the bank in the form of “interest management”. I’m no expert but I’d bet my last dollar banks have thought of and insultated themselves from any opportunity of losing interest that can be schemed up.

Save for revoloving half a million dollar debt between first year zero interest rate credit cards for 30 years, I can’t imagine any legal or non-pain-in-the-ass way around it.

Just take out a 15 year loan. Lower rates, and truly pay it off in half the time, with a ~35% higher monthly payment.

[Wickedheart]

“I was offered a bi-weekly payment option when I bought my last house. As I recall it knocked off about 6 or 7 years of payments on a 30 year loan.”

“If the lender offers that option, then yes, it works. But you have to pay 24 times per year. You can’t arbitrarily select to do it or not on your own.”

There are 52 weeks in a year so it would work out to 26 bi-weekly payments in a year. That would pretty much be like making one extra monthly payment a year.

[Wickedheart]

“I was offered a bi-weekly payment option when I bought my last house. As I recall it knocked off about 6 or 7 years of payments on a 30 year loan.”

“If the lender offers that option, then yes, it works. But you have to pay 24 times per year. You can’t arbitrarily select to do it or not on your own.”

There are 52 weeks in a year so it would work out to 26 bi-weekly payments in a year. That would pretty much be like making one extra monthly payment a year.

[Wickedheart]

“I was offered a bi-weekly payment option when I bought my last house. As I recall it knocked off about 6 or 7 years of payments on a 30 year loan.”

“If the lender offers that option, then yes, it works. But you have to pay 24 times per year. You can’t arbitrarily select to do it or not on your own.”

There are 52 weeks in a year so it would work out to 26 bi-weekly payments in a year. That would pretty much be like making one extra monthly payment a year.

[Wickedheart]

“I was offered a bi-weekly payment option when I bought my last house. As I recall it knocked off about 6 or 7 years of payments on a 30 year loan.”

“If the lender offers that option, then yes, it works. But you have to pay 24 times per year. You can’t arbitrarily select to do it or not on your own.”

There are 52 weeks in a year so it would work out to 26 bi-weekly payments in a year. That would pretty much be like making one extra monthly payment a year.

[Raybyrnes]

patientlywaiting

“But if you send the bank 1/2 of your payment they will apply it ALL to interest so you’re not reducing principal thus making no difference”

That’s not necessarily true. It increase the amount you are applying to the principal on the following payment threrefore reducing the outstanding principal balance. So there is a 1 pay lag time.

[Raybyrnes]

patientlywaiting

“But if you send the bank 1/2 of your payment they will apply it ALL to interest so you’re not reducing principal thus making no difference”

That’s not necessarily true. It increase the amount you are applying to the principal on the following payment threrefore reducing the outstanding principal balance. So there is a 1 pay lag time.

[Raybyrnes]

patientlywaiting

“But if you send the bank 1/2 of your payment they will apply it ALL to interest so you’re not reducing principal thus making no difference”

That’s not necessarily true. It increase the amount you are applying to the principal on the following payment threrefore reducing the outstanding principal balance. So there is a 1 pay lag time.

[Author]

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