Paying Off Mortage Early

[Melos]

Well, we all know that if you pay extra on your mortage payment every month or even every week, you will save a lot of money on interest charges. I just found a handy calculator where you can find out how much you have to pay per month if you want the mortage paid off in a certain time period.

For example: A $200,000 mortage at 7% interest is 1330.60 a month for 30 years.

If you want to pay it off in 20 years, you can pay 1553.58 per month.

Doing that will save you tens of thousands of dollars in interest as well.

Save by paying off your mortgage early

 

[katharina]

Well, we all know that if you pay extra on your mortage payment every month or even every week, you will save a lot of money on interest charges.

I'll have to check that calculator out... thanks! We got a 30 year mortgage
two years ago, but that was never the plan. "The plan" is to have it paid
off in 10 and we're on a good track for that so far. Hopefully 8 if possible.
The difference in the amount of payment that actually goes toward the
principal after making a few larger "principal only" payments is astonishing.

 

[Melos]

That is very important to be able to specify if an extra payment goes directly to the principal or not. And, of course, to make sure there is no penalty for early payment.

 

[katharina]

That is very important to be able to specify if an extra payment goes directly to the principal or not. And, of course, to make sure there is no penalty for early payment.

I'm not sure that whatever the penalty might be would be worth stretching it out for 30 years when we want to pay it off in 10. I'll need to check on that, but I have a feeling it won't matter.

 

[mamab]

I'm not sure that whatever the penalty might be would be worth stretching it out for 30 years when we want to pay it off in 10. I'll need to check on that, but I have a feeling it won't matter.

I don't think there SHOULD be a penalty, but that's my opinion. Let us know how much the penalty is, and if you decide to swallow the penalty for the benefit of paying it off early. I'm interested in what the difference is.

 

[katharina]

I don't think there SHOULD be a penalty, but that's my opinion. Let us know how much the penalty is, and if you decide to swallow the penalty for the benefit of paying it off early. I'm interested in what the difference is.

I can't find it in the papers and I can't call until Monday, *but* I'm pretty sure it was understood at the time that there would be no penalty. I really wouldn't drag a mortgage out for 30 years if we're in a position to pay it off in 10, though, I just can't see much sense in that, no matter what the penalty would happen to be.

 

[Penguin]

I don't think there SHOULD be a penalty, but that's my opinion. Let us know how much the penalty is, and if you decide to swallow the penalty for the benefit of paying it off early. I'm interested in what the difference is.

I agree there shouldn't be, but at the same time, I can sort of see why *they* want it... because look at all the interest they're losing when someone pays off early... they want to recoup some of that loss by having a penalty.

I agree, though, that if I were in a position to pay it off, it would have to be a major, major amount to prevent me paying it off!

 

[katharina]

I agree there shouldn't be, but at the same time, I can sort of see why *they* want it... because look at all the interest they're losing when someone pays off early... they want to recoup some of that loss by having a penalty.
I agree, though, that if I were in a position to pay it off, it would have to be a major, major amount to prevent me paying it off!

Yes, I can see their position but they're getting a lot of interest from me every month anyhow. I found out we don't have a penalty, whew!

 

[Melos]

Well, that is certainly true! You save a heck of a lot more money by paying off early than you would be avoiding a penalty. I was talking about... when you get the mortgage to begin with, you should go for one without early payment penalties.

 

[katharina]

Well, that is certainly true! You save a heck of a lot more money by paying off early than you would be avoiding a penalty. I was talking about... when you get the mortgage to begin with, you should go for one without early payment penalties.

Oh, absolutely. My problem was that it never occurred to me at the time to ask. It just turned out we were lucky because there is no penalty. I must have been naive about those matters because I never once thought that someone who'd do great with paying off such a big loan would be punished for working so hard and so many extra hours to do it.