Last week on my mortgage post, Makky's Mom asked how many years we have left on our mortgage. I couldn't give her an answer! Strictly speaking we are 5.5 years in to a 30 year mortgage so we have roughly 24.5 years left. However, more often than not, we've made extra principal payments to our mortgage every month. In fact I sat down last weekend, pulled out every mortgage statement from the last five years, fired up Excel and made some calculations. Our extra principal payments have been anywhere from just over $3/month (to make our payment a round number) to over $200/month (when we had an ESCROW adjustment and we kept with the same higher payment amount). We stopped making extra principal payments when C was laid off 15 months ago and have just started again with last month's payment.
I wanted to know how all those extra payments had helped us. I assumed that we would continue to make the extra payments until our interest rate resets in October this year. I assumed that rate reset would bring us back up to where we had been previously (5.125%) and I assumed we would continue that rate for the rest of our mortgage either through refinance or something else. Those are a lot of assumptions but I think they're pretty close to what will happen.
Anyway, after all those assumptions and calculations I found out that we've so far taken 11 months off our mortgage. So instead of 24.5 years left to pay, we have 23.5 years left to pay. Sweet! We'll continue to make extra payments as long as we can, even if it is just rounding up to whole numbers like we've done in the past.
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4 comments:
That's awesome. I wonder how much interest you've saved by eliminating 11 months from your mortgage. Did you figure that out?
Good question. For our almost $3k in extra principal payments, we've shaved about $14.5k off in interest payments. Not bad! (If my math is correct, of course)
That is wonderful. Keep doing it and more years will be taken off! Wouldn't it feel wonderful to have a fully paid for house? I can't wait!
Awesome! Keep it up as you can afford it. In the end, it will be so worth it to have no more mortgage payments!!!
We started our current mortgage in 2006 with a 25 yr amortization. Before the first payment even came out we increased our payments by $200/month. 3.5 years later, we increased again by another $200/month. Over 4 years of payments we are down to 12 years owing, from our original 25 yr mortgage. Making extra payments if you can squeeze them out of your budget is definitely the way to go. In another 2-3 years, we'll increase again by about $150/month (I believe that's our max allowed in extra monthly payments till we renew in 2016). We're hoping that we'll finish paying our mortgage by 2022, down from our original projection of 2031!
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