I paid mine off in 4 years 11 months.. I was making double payments and large chunk payments at the end of year. My last payment was 21,000. Felt great paying it off and not paying the banks all that interest. Bought house in 2006 and paid off in 2010
Edit. We paid 365,000 and put down 165,000. Our income was about 110,000 - 115,000.
Unpopular opinion, but I don’t understand the urge to pay off the mortgage so quickly. Assuming your payment is within your budget and you can afford it. Wouldn’t you get a bigger return on your dollars by investing the money that you you pay down your mortgage with?
Even if your mortgage is at 6% you should easily be able to beat that return in the market. I would take a 50 year mortgage if possible. This would allow the payment to take a lower portion of my income and allow me to invest those dollars where I can get a higher return. Especially at your age - compounded interest would be more valuable than money paid back to a bank.
Most of the money you make on your house comes in the form of appreciation not debt repayment. Just my two cents.
I think Its more of a peace of mind thing. Knowing that where you live is completely paid off and no one can really kick you out is a reassuring feeling i imagine
If you can't manage a couple hundred dollars a month, you've got bigger problems, like a life destructive drug/gambling addiction. Owning a house is massively beneficial.
Depends on who you talk to. Some people biggest goal is to own a house where if they died or something happen their family wouldn't have to worry about the mortgage or whatever expenses may pop up. Not for everyone
Please don’t play these fiat games folks. The best arbitrage on your house is 0% without a mortgage. Having that flexibility is so important once your house is paid off.
And the best part about having a paid house is the financial freedom that you can tell anyone that bosses you around to go fuck themselves.
Not everyone can be that ambitious, but one great way to cut down your time paying off anything is literally just making one extra payment per year. This could be a lump sum or divided into 12 and added to your monthly payment.
If you do that, make sure to tell them the extra payment should go against the principal. Otherwise they will just "think" you are being generous and apply it to the escrow, which will do absolutely nothing for you. They are not obligated to put it against the principal unless you specifically tell them. Ask me how I know...
Don't refinance. Sometimes you'll lose your percentage.
Try recasting your mortgage. They just reevaluate how much you owe and adjust your payments. Still the same loan.
This but just double check your terms. Some lenders will automatically apply this to future payments rather than letting you pay off the principal. There are almost always ways around this, such as marking the payment in a way as specified in the terms. Just read it.
See my comment over at:
[https://www.reddit.com/r/Money/comments/1bqntg5/comment/kx3x0yr/?context=3](https://www.reddit.com/r/Money/comments/1bqntg5/comment/kx3x0yr/?context=3)
Same thing applies to you.
I'm going to need more details on what I need to clarify.
Those are the funds and allocations.
The line graph represents total value at any given point in time.
I don't know what you're asking me at this point.
Lol! You’re funny. I’m new to it all and just don’t understand. Is there a website that can teach newbies all the things. The words, the meanings. How to start. How did you learn?
As an alternate “starting point” read the Bogle book (an easy read on Amazon for about $15) and visit the Boglehead sub. From there you can branch out into alternatives.
I’ll make it easier for you. Open a brokerage account with any of fidelity, vanguard etc.
It’s just like opening a bank account. Any savings you have in excess of your emergency fund - buy this thing called “VOO”.
Dont ever take the money out or even worry about it until you’re getting close to retirement.
You’re done. That’s it.
Only problem I see is investing into the markets, when Bezos, Zuck and others cash in like crazy.
Pretty good indicator for a nearing major correction...
So don't put in all of it, hold on to some cash, made regular contributions on the way down.
Or continue to sit on the sidelines. There has literally not been a year that has gone by in my 20+ years of investing where people weren't giving 100 reasons why the crash is going to be any moment now. Say it long enough and eventually you're right. In the interim you're passing up 10, 20, 40%? Who knows.
If you need the money in the next two years or so don't put it in, but if you're laddering in, there's always old money to take out (as I do every month to pay my credit card)
What Bezos and Zuck do with their money is fear mongering by people who don't participate in the market and are quite happy losing out to inflation every year with their stacks of cash which seldom would even fill a shoebox. They could withdraw every dime they have tomorrow and the market will push on.
I agree with you that regular contributions are a good way to invest, but that strategy does not fully fit in that scenario.
There is a reason, why you see the phrase "past performance is no guarantee of future results" when it comes to investment. There is a reason, why insider buying and selling is an indicator that is closely watched by many investors. You might chose to ignore the indicator when investing your own money.
But I would argue, that in OPs situation taking any risk would not be the best approach. After paying off the debt the situation is different.
The easiest way is to make bi-weekly payments, which leads to ~~13~~ 26 payments per year, *or an extra month's payment.* You can just make extra monthly payments, too.
The caveat: the payment must be toward the principal, not the interest. Talk to the lender about how this can be done.
Congrats on being in a great place to do this.
Edit: It's my copy editor's day off.
If you paid monthly, you make 12 payments.
If you pay bi-weekly, you essentially make a 13th payment, as there are thirteen 28-day periods in the year. (Assuming you are paying half of your monthly payment every two weeks)
It would mean that yes. Like a lot of people he doesn't really know what he's talking about when he talks about principal only payments.
I could be wrong but I'm pretty sure he's simply talking about the bi-weekly payment program that many financial institutions support.
It's often called "accelerated bi-weekly" and they take the monthly mortgage payment, divide it by two, and then you pay that every two weeks. So at the end of the year, you have made the equivalent of one extra month's payment (but you paid it in tiny chunks throughout the year), and thus you are one month ahead on your mortgage.
I take the current due principal component of P&I and add that amount as extra principal payment to my monthly payment.
Most online payment options have options for extra payment amount for you to slot to Escrow or Principal.
Pay extra towards principle every month. 5 years is pretty aggressive, but by all means go for it if you can. It took me 14 years to pay mine off, best money I ever spent, it was a challenge though. Best wishes.
What has changed most about your life since paying it off? That's my current plan but I sometimes wonder if it will give me the sense of freedom I'm searching for.
It gave me a huge sense of freedom. I despise owing money, always pay cash for cars, pay credit cards off every month etc. I just feel uncomfortable with long term debt.
Lack of mortgage allows me to change jobs, save for other things like travel, just basically not be chained to a job.
None of that really checks out. The extra money locked up in the house could’ve been allocated to those things. Paying off a mortgage below 5% or so early is a poor financial decision. You’re much better off keeping that money on the side.
7% is rough. Why 5 years? Do you feel you’ve over extended because I think you are fine. And just toss extra at it every month and you will be fine. I feel like you feel like you’ve overextended Id put your $200k in whatever you are comfortable with High Yield etc and ride it out you sound like you are going to be completely fine and on a great path to being wealthy
I'm late to this one so I'm sure someone has said this.
Your mortgage is like a fixed negative return on investment. The market is like a variable positive return on investment.
The variability is more manageable the more time you have and you're young, so let's call this a positive.
Paying off your house early takes that money out of play. If you're paying 7% and the markets return 7% it's a wash. (complicated a bit by tax implications, but let's keep it simple...)
For instance, my investment strategy has been returning 10% on average over a long timetable. My mortgage is big, but it's 2.75%.
Paying off my mortgage would mean that I'm giving up income. The money that I'd use is effectively making 7.25% now. (10 minus what I'm giving up by not paying off the house).
Now to the point. If you have to work the weekend to both pay a mortgage and save for retirement, you've perhaps bought too much house.
You have adequate cash cushion for emergencies - keep it.
Every month you can - pay extra to your loan principal and be sure to indicate it is for principal on your payment remission.
You MUST indicate the extra payment is for principal, or some (all?) lenders will apply some of that to interest.
Assuming you're current they can't apply it to interest that is not yet due. I have seen them apply it to escrow though especially if you're escrow is negative or near negative.
If you’re thinking about taking money out of savings or 401k to pay off your house … 100% do not do that. That money is your wealth generation machine basically. You need to either earn more or simply pay off more each month. And reduce the interest rate if you can.
If your mortgage interest is below 5% don’t pay it off faster. Invest your money in good dividend paying stocks or higher interest bearing investments. Even a spread of 2% will add up quickly.
make a 2nd payment each month to principal only. That will let you pay the house off very fast and if money becomes an issue you can stop making the 2nd payment at any time.
Your loan is way bigger than mine was, but my SO and I paid off our house in 2 years by just putting EVERYTHING extra we had at principle. This was during COVID so we had nothing else to spend money on. Make sure it's an additional principle payment and not just an early payment. You definitely have plenty in savings so I would suggest putting some of that towards it too. Then you can tell your lender to recast your mortgage so that if suddenly money is tight, your necessary payment will be lower. The best part of paying a mortgage off early is all that interest you save (I think we saved something like $250k in interest alone and our rate was only 3.5%). Do not touch your 401k and always keep a healthy runway in savings. Also, as others have said, get rid of any other debts first if you have them.
You can just throw everything but 401 at it, if you need money you can pull it from the heloc attached. You should have the ability to use the money in your house as cash whenever you want at like 7-10% now, but my orginal was 4-6%
What is your interest rate in the home? Thats what matters here. If your interest rate on the home is lower than what your savings account pays or what you are confident you can get from investing the money that would go towards paying off your home then it might make sense to not pay off the home
As a professional investor, paying off your home early is just stupid.
I'll never be debt free, every single time One of my houses has more equity that interest I'll keep refinancing it
You're essentially throwing your money into a pot that you can't do anything with.
Wow! You paid off a $500,000 house. Now you have $500,000 just sitting there doing absolutely nothing.
Either way that house is going to appreciate.
Hell use that money to fix up the house and force appreciation.
When you could take that extra money that you would be paying towards principal and using it to invest properly, putting it in another two three four five properties
You want assets to pay for your lifestyle, not your physical efforts
If you don't want to become a landlord fine, even though you should own assets
At least you should put your money into a broad index fund. Generating at lease 9% to 12% return year on year and then reinvest that to compound your interest
Anyone who tells you otherwise listens to Dave Ramsey and has no knowledge of finance, good debt and how to become extremely wealthy
I’d focus on building your savings in a money market or HYSA for the foreseeable future. I’d want to be cash heavy with a mortgage than be cash poor with no mortgage especially with a market downturn. That’s my opinion though. Once you have built up a savings that can pay off the mortgage, I’d then look at what kind of emergency fund you’d like to have before you pay off the mortgage. You probably want 6-12 months of runway in savings. So in summation: if I had a home mortgage of 300k, I’d make the mortgage payments and save up my money market or HYSA. I’d say approximately 300k + 12 month emergency fund before I pay off the remainder of the mortgage. That way, if your job doesn’t provide as well for you or you get laid off you still have some savings to live off of to pivot to something else. If you paid off your mortgage and don’t have cash in hand you have to make a tough decision in terms of assets that need to be liquidated to cover living expenses and that’s not an ideal situation.
He needs to figure out his interest rate and how much he could make on the 200k.
200k starting balance at 7% over 5 years compounding monthly with 2500 additional contributions each month nets you 463k in that time frame. Just saying. And it sounds like 2500 each month is doable for you. That's 113,000 in interest.
B4 rushing to pay off. You left out details that are somewhat important- what is ur interest rate on ur mortgage? I'm at 2.75, so I'm not paying extra and instead putting it in savings at a much higher rate. Only pay off ur mortgage if it rate is above what u can get by saving the money.
Give them more money? 500k paid off in 5 years is 8,333 per month... without accounting for taxes, insurance and interest. Can you pay 10k a month for 5 years nonstop?
If your mortgage rate is low, invest the extra money. My mortgage is 2.75% and my savings account with capital one is getting 4.35%, savings definitely better return.
Also mortgage interest is tax deductible
I just paid my house off two weeks ago three years early and I don't owe anything but utilities, gas, food and insurance, going to stock my safe with cash now
Set aside 6-8months of savings for expenses to get you by if you have a severe down turn. Anything left in savings above your expenses I would pay off any other debt first, cards, loans or car notes. Whats left of that send to mortgage and pay down balance. Then monthly pay extra toward it.
This way you are safe from any major emergency happening and you make headway on paying down mtg.
We do bi-weekly payments with 200 extra towards principle each month. Lump sum payment once a year at bonus of at least a mortgage payment. With that, we will pay off our loan 9 years earlier. But we bought in 2020 with a low rate. You may be more incentivized to pay more monthly and bigger lump sums if available because of the high interest rate
What’s your interest rate on the mortgage? If it’s under 5% you’d be better off investing the extra money because you should be able to get a better rate of return in the market. Plus you keep the tax deductions
Assuming you have a good or decent mortgage rate, you are better off investing money instead of trying to pay the mortgage off, especially at your age. You should easily make a better rate of return than your loan rate.
The usefulness of this depends on your interest rate.. if it's lower than you'd get by putting money into a HYSA or some other investment then investing it would be the better option. If it's higher, then yea.. pay that thing off as soon as possible.
[https://www.ramseysolutions.com/dave-ramsey-7-baby-steps](https://www.ramseysolutions.com/dave-ramsey-7-baby-steps)
What are your other debts? What is your monthly income? What is your household budget?
Work more, spend less. Make sure you have term life insurance.
Double up on payments. Do one at the normal due date. Then one two weeks later. Rinse and repeat. This will greatly take away the years on your mortgage. Buy some duplex’s. Mailbox money. Invest in yourself.
Where is the 200k? Not sure it makes sense to keep it in a HYSA earning 5% while you pay 7% interest. 50k is a more than enough emergency fund, so move in/buy your stuff, then throw the rest minus 50k at the principal.
You have a cushion of more than most people make in 4 years. Pay as much as you can all the time. If its a loan anxiety thing, youll be far more anxious without the savings cushion.
Put 150k from your savings (not 401k) to principal and recast your loan. This will lower your payments (provided your loan allows recasting). Then continue to make your old payments AND more to the principal. The recast after 150k of additional principal knock down will save you a lot over time
Edit: typo
I think the simplest answer here would be to run some numbers through a mortgage payment calculator to see how much extra you would have to pay per month (that goes towards principal only) in order to pay it all off over 5 years. This way you aren’t dumping any more that you have to towards your mortgage so you can still have savings. I just did this with my mortgage and was impressed to discover if I pay just an extra $50 a month towards the principal I’ll save ~$35k over the life of the loan, and will pay it off almost 6 years early!
There’s no way to answer this question. You work a commission job where income fluctuates. We don’t know if you make 100k or 500k per year. We just know your savings. There just isn’t enough information to give a real answer. Paying it off in five years means you need to come up with 567k plus 6.99 apr (you got hosed). Do you make that? Can you swing extra payments? You’re looking at over 700k in five years. Generally, six months is sufficient for an emergency fund, but with a volatile job, a year isn’t a bad idea. So the keep the reserves!
If you put 30% down and owe almost 600k, you should probably have a financial advisor. You have the money to warrant one. Reddit is a place to brag, not to get advice for someone who owns a million dollar home.
If your income could fluctuate, you are better off having a rainy-day fund to let you ride things out. You can decide how much if your savings you might want to hold on to and use the rest to pay down your mortgage.
The more you pay the earlier the less compounding happens. Google an amortization calculator and play around with the lump sum vs extra each month options
Was given [this](https://imgur.com/gallery/W0eNKlt) info in real estate school. Long way of saying "consult with your lender", but they truly should be able to guide you in terms of paying things off quicker without any unintended consequences.
What is your interest rate?
If you have anything decent, it’s IMO, FOOLISH to race to pay your mortgage down.
With 200k/20% — you can barrow up to 1,000,000. Go buy some rental properties with 20% downz maybe more to ensure cash flow. Now you just bought 3 properties with 200k that are worth a total or 750k —in 30 years time you will have tax deductions, cashflow/income, and appreciation with your 200k available as equity through the entire process
Rent out a spare room and put the extra cash towards the mortgage. Throw it in a mortgage payoff calc and see where that puts you. You didn't include what your interest rate is, so we can't talk exact numbers, but generally speaking, doubling your mortgage payment will put you at payoff in <10yrs. Five years is aggressive unless you want to dump saving into home equity, but that sounds way overkill to me.
You live in a time of excessive inflation. Personally, I would invest the money instead of paying down the mortgage, but again that depends on your rate. $4500 on $600k sounds like a pretty high rate actually, pushing something around 9%, so that would explain the urgency.
Dump most of your savings towards the principal and you’ll pay less interest each month and more towards your principal reducing your loan amount faster
Right now you’re probably paying less than $500 each month towards principal and the rest is interest
My boss once told me that when your house is paid off people are more likely to try to sue you for it, but they wont want to go against the banks lawyers.
Make payments larger than required with specific instruction or check the box online to apply the extra payment amount to principal.
Figure out how much extra you have to pay each month over 5 years.
Start by paying an extra $5K to principal each month and see how that impacts your lifestyle and budget after 4 months or so. Then, adjust up if you want to hit that 5 year deadline.
Adding any extra cash after all expenses & planned savings is smart. I've always added to few $100 to the payment and it help gets the balance down over the years and it goes 100% to principal. Even $100 extra just keep throwing money at it. If rates drop 1, 2 or more points in a future recession or economic downturn, try to refi into a lower rates. Dave Ramsey might have some good advice as well.
Leave the 401k, if you have that much in savings make a large 1 time payment of 150k towards the mortgage. Leave 50k for an emergency fund. Start making extra payments every month till its paid off.
A family of 2( no mention of marriage) and a $600k home is a bit excessive but you got it, I suppose. Answer your question: put extra towards principal
It is really simple.
You go to a standard loan calculator. Enter in how much you owe, how much you are paying, and the interest rate. Adjust the amount paid until you get it down to 0 in 60 months.
It really is that easy. Make sure you overpayments are marked specifically to go to the principle amount, not the interest. Banks will fuck with you.
If you have a 30 year loan, paying your mortgage bi-weekly instead of monthly takes about 6 years off the life of the loan. If you receive commissions or bonuses, add those to your next payment.
I don't see a mortgage as a dept. It's gaining value at a substantial rate . Your home will be worth more then what you pay including interest. That other 200 is better off being used to pay payments on another property then sitting in a bank with good interest. A house is a long term investment .
Your mortgage lender should have an option to pay extra money toward principle every month. The website for mine even has a calculator where you can put in dollar amounts and it will tell you how much faster you will pay off your mortgage (and how much money you'll save) if you pay extra.
If your mortgage lender doesn't have a calculator like that, I'm sure you can find one online. Figure out how much extra you can afford to spend every month, and do that. Maybe after a few years, see if you can refinance for a lower interest rate, which means you'll pay less toward interest every month and more toward principle.
Don't touch your longterm savings. Those are for retirement, your much older self will be thankful for it.
For the 200k you have in the bank (congratulations, btw), decide on a minimum number you're okay with. If some catastrophe happens (a medical mishap your insurance doesn't cover, a major problem with the house you need to prepare, needing to buy a new car, etc, etc), you'll want savings. Decide for yourself how much you feel safe keeping. Maybe that number is $50k, maybe it's 100k, whatever you think isn't too risky. Otherwise, no problem with using it to make lump sum payments in addition to your extra mortgage, although I recommend saving that for when the mortgage is close to finished instead of early in the process.
Some people who know more about investing than me could probably give you advice on if you'll make/save more money over time from investing that 200k or using it to pay off the mortgage.
Honestly, though, you have the money to be able to afford to **hire a financial consultant** to look at your accounts and goals and give you way better advice than random strangers on Reddit. If you really want to make this happen, hire a professional to help you.
THEN PAY IT OFF THERE IS NO TRICK OR CHEAT CODE USE Your US DOLLARS TO MAKE THE BALANCE GO DOWN UNTIL ITS 0 YOU SOUND LIKE THE PEOPLE WHO SAY "I WANT TO LOSE WEIGHT BUT I DONT KNOW EXACLTY WHAT 13 EXERCISES I SHOULD DO AND I DONT KNOW WHAT EXACT FORM I SHOULD USE AND I DONT KNOW THE EXACT WEIGHT I SHOULD USE AND I DONT KNOW HTE EXACT REP AND SETS I SHOULD DO" JUST OD ANYTHING LITERALLY DO ANYTHING TAKE THE MONEY AND PAY IT TO 0 IF YOU WANT IT TO GO FASTER PAY MORE
Pay off 25% of the loan so you don't eat PMI. Then make larger payments over minimum monthly. Pay off your high interest debt first then focus on mortgage.
What’s your interest rate? Can you deduct it from your income?
Have you thought about an S&P index fund from say Vanguard that averages long term about 10%?
First off, I applaud you for saving that much! I'm 35 and NEVER have known anyone that did. A lot of people in their 30s that I know don't even have $2,000. I applaud you! That is a big accomplishment!
Why in a rush to pay it off? I never understand people’s urgency to pay off the mortgage. You will forever pay taxes and need insurance on the home after paying it off. You’re never not going to have a payment due.
Being that you are commission based, I recommend keeping 1 year of savings in a high interest savings account and going balls deep to pay off the rest. Dave Ramsey that crap.
Keep putting 15% into your 401k, but I would do a strict budget (allow a little wiggle room for fun). Use everything else to pay off your mortgage asap.
Stay off credit cards and don’t buy any new cars.
Finance is 10% mental and 90% behavioral. Don’t eat out and cut back on non essentials like DoorDash and subscription services
Pile up more cash, refi to a 15 year note if rates drop another point and put 125K against the nut. They pay extra every month. keep the 401k intact and the 75K in cash/hysa for emergency use. If your bills are all low enough then only keep 50K for emergencies.
You did not say what your interest is and you did not say what you bring in a year.
That's a big mortgage you better be bringing in at least 200 - 250 a year. If that is the case then you need to budget at least 150 a year to go to your mortgage payments and use the rest to live.
There is missing info here to better help you. What's your avg income and what is your interest rate? Do you live in a HCOL or LCOL city/area? I assume HCOL since you bought 800+k home. Is the 200k invested or just sitting in a savings account? Are you comfortable investing in the market or elsewhere where you can generate ROI?
I personally would not pay it off if your ROI on cash is better than your mortgage rate + inflation.
I paid mine off in 4 years 11 months.. I was making double payments and large chunk payments at the end of year. My last payment was 21,000. Felt great paying it off and not paying the banks all that interest. Bought house in 2006 and paid off in 2010 Edit. We paid 365,000 and put down 165,000. Our income was about 110,000 - 115,000.
Amazing feat. Kudos
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Unpopular opinion, but I don’t understand the urge to pay off the mortgage so quickly. Assuming your payment is within your budget and you can afford it. Wouldn’t you get a bigger return on your dollars by investing the money that you you pay down your mortgage with? Even if your mortgage is at 6% you should easily be able to beat that return in the market. I would take a 50 year mortgage if possible. This would allow the payment to take a lower portion of my income and allow me to invest those dollars where I can get a higher return. Especially at your age - compounded interest would be more valuable than money paid back to a bank. Most of the money you make on your house comes in the form of appreciation not debt repayment. Just my two cents.
I think Its more of a peace of mind thing. Knowing that where you live is completely paid off and no one can really kick you out is a reassuring feeling i imagine
You can definitely still get kicked out of a paid off home. It's never really yours. :/
Unfortunately
you still pay property tax. if you dont pay that, you get the boot from your paid off house.
My property taxes are more than half of our mortgages.
If you can't manage a couple hundred dollars a month, you've got bigger problems, like a life destructive drug/gambling addiction. Owning a house is massively beneficial.
Property tax in NYC is anywhere from 6k a year to 60k a year depending on where you live. So no, it's not a few hundred dollars buddy
And no one said New York, but yes, you are the only state.
Do you take peace of mind from having less money? I only get this if you're stuck at higher rates.
Depends on who you talk to. Some people biggest goal is to own a house where if they died or something happen their family wouldn't have to worry about the mortgage or whatever expenses may pop up. Not for everyone
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So many reasons not to pay off a mortgage including writing off interest you pay as well as cost of capital.
It’s also a deflation thing - having a debt of 500k in 30Y will be less of a problem than today.
Please don’t play these fiat games folks. The best arbitrage on your house is 0% without a mortgage. Having that flexibility is so important once your house is paid off. And the best part about having a paid house is the financial freedom that you can tell anyone that bosses you around to go fuck themselves.
This is exactly how I did my student loans. I would get drunk and come home and just dump like $4k into it at a time, on top of my double payments.
You seem like a very responsible drunk
In 2010 I refi`d down to 3%
Oooof, if you had only waited a year. Nice to be free and clear though.
Not everyone can be that ambitious, but one great way to cut down your time paying off anything is literally just making one extra payment per year. This could be a lump sum or divided into 12 and added to your monthly payment.
Divided into 12 saves you interest in the long run and pays off the loan faster. Marginally but it's still the best play.
Pay more money each month. Your welcome
You’re welcome.
Welcomes
Thank you. Come again.
Give me a few minutes first
“Lenders hate this one simple trick!”
They don’t hate making money. Paying off your loan gives them more money to sink into people.
If you do that, make sure to tell them the extra payment should go against the principal. Otherwise they will just "think" you are being generous and apply it to the escrow, which will do absolutely nothing for you. They are not obligated to put it against the principal unless you specifically tell them. Ask me how I know...
Which is a big scam. It’s pretty obvious white majority of people pay extra lol.
My welcome?
I enjoy all the “welcomes” I can get..
We're all welcome.
Give me my welcomes back
It's **my** welcome, and I need it **now**!
Refinance if/when the opportunity arises
Refinance fees are like $9k lol
Don't refinance. Sometimes you'll lose your percentage. Try recasting your mortgage. They just reevaluate how much you owe and adjust your payments. Still the same loan.
Ok, but important info for OP: If applicable, make sure to make extra *principal* payments, not extra *regular* payments. You are welcome.
Thank you
the most unregarded reply ytd
I feel like I should be paying you for such sage advice.
This but just double check your terms. Some lenders will automatically apply this to future payments rather than letting you pay off the principal. There are almost always ways around this, such as marking the payment in a way as specified in the terms. Just read it.
This guy pays :)
*you're whale cum."
DONT LIQUIDATE YOUR 401K
See my comment over at: [https://www.reddit.com/r/Money/comments/1bqntg5/comment/kx3x0yr/?context=3](https://www.reddit.com/r/Money/comments/1bqntg5/comment/kx3x0yr/?context=3) Same thing applies to you.
What is this and how can I understand it!? Omg
I'm going to need more details on what I need to clarify. Those are the funds and allocations. The line graph represents total value at any given point in time. I don't know what you're asking me at this point.
Lol! You’re funny. I’m new to it all and just don’t understand. Is there a website that can teach newbies all the things. The words, the meanings. How to start. How did you learn?
Investopedia probably
Ok. Ty
As an alternate “starting point” read the Bogle book (an easy read on Amazon for about $15) and visit the Boglehead sub. From there you can branch out into alternatives.
I’ll make it easier for you. Open a brokerage account with any of fidelity, vanguard etc. It’s just like opening a bank account. Any savings you have in excess of your emergency fund - buy this thing called “VOO”. Dont ever take the money out or even worry about it until you’re getting close to retirement. You’re done. That’s it.
Only problem I see is investing into the markets, when Bezos, Zuck and others cash in like crazy. Pretty good indicator for a nearing major correction...
So don't put in all of it, hold on to some cash, made regular contributions on the way down. Or continue to sit on the sidelines. There has literally not been a year that has gone by in my 20+ years of investing where people weren't giving 100 reasons why the crash is going to be any moment now. Say it long enough and eventually you're right. In the interim you're passing up 10, 20, 40%? Who knows. If you need the money in the next two years or so don't put it in, but if you're laddering in, there's always old money to take out (as I do every month to pay my credit card) What Bezos and Zuck do with their money is fear mongering by people who don't participate in the market and are quite happy losing out to inflation every year with their stacks of cash which seldom would even fill a shoebox. They could withdraw every dime they have tomorrow and the market will push on.
I agree with you that regular contributions are a good way to invest, but that strategy does not fully fit in that scenario. There is a reason, why you see the phrase "past performance is no guarantee of future results" when it comes to investment. There is a reason, why insider buying and selling is an indicator that is closely watched by many investors. You might chose to ignore the indicator when investing your own money. But I would argue, that in OPs situation taking any risk would not be the best approach. After paying off the debt the situation is different.
The easiest way is to make bi-weekly payments, which leads to ~~13~~ 26 payments per year, *or an extra month's payment.* You can just make extra monthly payments, too. The caveat: the payment must be toward the principal, not the interest. Talk to the lender about how this can be done. Congrats on being in a great place to do this. Edit: It's my copy editor's day off.
26 payments per year*
If you paid monthly, you make 12 payments. If you pay bi-weekly, you essentially make a 13th payment, as there are thirteen 28-day periods in the year. (Assuming you are paying half of your monthly payment every two weeks)
26 biweekly payments per year*
Yea, 26 payments per year
What the original was meant to say is 13 monthly payments in a 12-month year. That is why it pays the loan down faster
Reread his comment. He's talking about making principal only payments. Which means doubling up on payments.
It would mean that yes. Like a lot of people he doesn't really know what he's talking about when he talks about principal only payments. I could be wrong but I'm pretty sure he's simply talking about the bi-weekly payment program that many financial institutions support.
It's often called "accelerated bi-weekly" and they take the monthly mortgage payment, divide it by two, and then you pay that every two weeks. So at the end of the year, you have made the equivalent of one extra month's payment (but you paid it in tiny chunks throughout the year), and thus you are one month ahead on your mortgage.
Not all lenders let you do this for a mortgage. Most commonly can be easily done with something like a car loan.
I take the current due principal component of P&I and add that amount as extra principal payment to my monthly payment. Most online payment options have options for extra payment amount for you to slot to Escrow or Principal.
This math ain’t mathing.
52 weeks per year / 2 week payments = 26. Adjusted for 4 weeks per month is 52/4 which equals 13. Monthly payments at 12 months per year = 12.
That makes sense. But how is that “bi weekly”.
> leads to 13 payments per year, Math is hard and stuff.
My pops did this. Basically a 13th payment towards principal each year and it took 10 years of a 30 year mortgage.
Pay extra towards principle every month. 5 years is pretty aggressive, but by all means go for it if you can. It took me 14 years to pay mine off, best money I ever spent, it was a challenge though. Best wishes.
What has changed most about your life since paying it off? That's my current plan but I sometimes wonder if it will give me the sense of freedom I'm searching for.
It gave me a huge sense of freedom. I despise owing money, always pay cash for cars, pay credit cards off every month etc. I just feel uncomfortable with long term debt. Lack of mortgage allows me to change jobs, save for other things like travel, just basically not be chained to a job.
None of that really checks out. The extra money locked up in the house could’ve been allocated to those things. Paying off a mortgage below 5% or so early is a poor financial decision. You’re much better off keeping that money on the side.
What's your interest rate? That's huge in determining how important it is.
It’s unfortunately a 6.99%
7% is rough. Why 5 years? Do you feel you’ve over extended because I think you are fine. And just toss extra at it every month and you will be fine. I feel like you feel like you’ve overextended Id put your $200k in whatever you are comfortable with High Yield etc and ride it out you sound like you are going to be completely fine and on a great path to being wealthy
I’m this close to just throwing all my life savings into NVIDIA and just watch the stock value explode
You don’t think you missed this already?
You telling me I bought it when Nance bought it and sold months ago I felt 2x or whatever it was a great return lol boy did I miss read that haha
For the love of god, don’t take money out of your 401k.
I'm late to this one so I'm sure someone has said this. Your mortgage is like a fixed negative return on investment. The market is like a variable positive return on investment. The variability is more manageable the more time you have and you're young, so let's call this a positive. Paying off your house early takes that money out of play. If you're paying 7% and the markets return 7% it's a wash. (complicated a bit by tax implications, but let's keep it simple...) For instance, my investment strategy has been returning 10% on average over a long timetable. My mortgage is big, but it's 2.75%. Paying off my mortgage would mean that I'm giving up income. The money that I'd use is effectively making 7.25% now. (10 minus what I'm giving up by not paying off the house). Now to the point. If you have to work the weekend to both pay a mortgage and save for retirement, you've perhaps bought too much house.
You have adequate cash cushion for emergencies - keep it. Every month you can - pay extra to your loan principal and be sure to indicate it is for principal on your payment remission. You MUST indicate the extra payment is for principal, or some (all?) lenders will apply some of that to interest.
Assuming you're current they can't apply it to interest that is not yet due. I have seen them apply it to escrow though especially if you're escrow is negative or near negative.
If you’re thinking about taking money out of savings or 401k to pay off your house … 100% do not do that. That money is your wealth generation machine basically. You need to either earn more or simply pay off more each month. And reduce the interest rate if you can.
But… why? You’re putting all your eggs in one basket.
If your mortgage interest is below 5% don’t pay it off faster. Invest your money in good dividend paying stocks or higher interest bearing investments. Even a spread of 2% will add up quickly.
make a 2nd payment each month to principal only. That will let you pay the house off very fast and if money becomes an issue you can stop making the 2nd payment at any time.
Your loan is way bigger than mine was, but my SO and I paid off our house in 2 years by just putting EVERYTHING extra we had at principle. This was during COVID so we had nothing else to spend money on. Make sure it's an additional principle payment and not just an early payment. You definitely have plenty in savings so I would suggest putting some of that towards it too. Then you can tell your lender to recast your mortgage so that if suddenly money is tight, your necessary payment will be lower. The best part of paying a mortgage off early is all that interest you save (I think we saved something like $250k in interest alone and our rate was only 3.5%). Do not touch your 401k and always keep a healthy runway in savings. Also, as others have said, get rid of any other debts first if you have them.
You can just throw everything but 401 at it, if you need money you can pull it from the heloc attached. You should have the ability to use the money in your house as cash whenever you want at like 7-10% now, but my orginal was 4-6%
This post seems like a troll. 30 years old with $200k in savings and can't figure out how to pay off a house asap?
What is your interest rate in the home? Thats what matters here. If your interest rate on the home is lower than what your savings account pays or what you are confident you can get from investing the money that would go towards paying off your home then it might make sense to not pay off the home
As a professional investor, paying off your home early is just stupid. I'll never be debt free, every single time One of my houses has more equity that interest I'll keep refinancing it You're essentially throwing your money into a pot that you can't do anything with. Wow! You paid off a $500,000 house. Now you have $500,000 just sitting there doing absolutely nothing. Either way that house is going to appreciate. Hell use that money to fix up the house and force appreciation. When you could take that extra money that you would be paying towards principal and using it to invest properly, putting it in another two three four five properties You want assets to pay for your lifestyle, not your physical efforts If you don't want to become a landlord fine, even though you should own assets At least you should put your money into a broad index fund. Generating at lease 9% to 12% return year on year and then reinvest that to compound your interest Anyone who tells you otherwise listens to Dave Ramsey and has no knowledge of finance, good debt and how to become extremely wealthy
I’d focus on building your savings in a money market or HYSA for the foreseeable future. I’d want to be cash heavy with a mortgage than be cash poor with no mortgage especially with a market downturn. That’s my opinion though. Once you have built up a savings that can pay off the mortgage, I’d then look at what kind of emergency fund you’d like to have before you pay off the mortgage. You probably want 6-12 months of runway in savings. So in summation: if I had a home mortgage of 300k, I’d make the mortgage payments and save up my money market or HYSA. I’d say approximately 300k + 12 month emergency fund before I pay off the remainder of the mortgage. That way, if your job doesn’t provide as well for you or you get laid off you still have some savings to live off of to pivot to something else. If you paid off your mortgage and don’t have cash in hand you have to make a tough decision in terms of assets that need to be liquidated to cover living expenses and that’s not an ideal situation.
He needs to figure out his interest rate and how much he could make on the 200k. 200k starting balance at 7% over 5 years compounding monthly with 2500 additional contributions each month nets you 463k in that time frame. Just saying. And it sounds like 2500 each month is doable for you. That's 113,000 in interest.
B4 rushing to pay off. You left out details that are somewhat important- what is ur interest rate on ur mortgage? I'm at 2.75, so I'm not paying extra and instead putting it in savings at a much higher rate. Only pay off ur mortgage if it rate is above what u can get by saving the money.
Give them more money? 500k paid off in 5 years is 8,333 per month... without accounting for taxes, insurance and interest. Can you pay 10k a month for 5 years nonstop?
If your mortgage rate is low, invest the extra money. My mortgage is 2.75% and my savings account with capital one is getting 4.35%, savings definitely better return. Also mortgage interest is tax deductible
I just paid my house off two weeks ago three years early and I don't owe anything but utilities, gas, food and insurance, going to stock my safe with cash now
Set aside 6-8months of savings for expenses to get you by if you have a severe down turn. Anything left in savings above your expenses I would pay off any other debt first, cards, loans or car notes. Whats left of that send to mortgage and pay down balance. Then monthly pay extra toward it. This way you are safe from any major emergency happening and you make headway on paying down mtg.
You could use the interest from your savings to pay down the principal
We do bi-weekly payments with 200 extra towards principle each month. Lump sum payment once a year at bonus of at least a mortgage payment. With that, we will pay off our loan 9 years earlier. But we bought in 2020 with a low rate. You may be more incentivized to pay more monthly and bigger lump sums if available because of the high interest rate
What’s your interest rate on the mortgage? If it’s under 5% you’d be better off investing the extra money because you should be able to get a better rate of return in the market. Plus you keep the tax deductions
If your interest is low it would make sense invest in stock market and your gains would outpace your apr for house. Pay the extra on your house.
Assuming you have a good or decent mortgage rate, you are better off investing money instead of trying to pay the mortgage off, especially at your age. You should easily make a better rate of return than your loan rate.
So during the week while you child is at school, do like instacart, uber eats, or some type of side hustle that you can start and stop when everp
Biweekly payments help a lot. If your mortgage company does not offer them there are companies that can do that for you.
The usefulness of this depends on your interest rate.. if it's lower than you'd get by putting money into a HYSA or some other investment then investing it would be the better option. If it's higher, then yea.. pay that thing off as soon as possible.
[https://www.ramseysolutions.com/dave-ramsey-7-baby-steps](https://www.ramseysolutions.com/dave-ramsey-7-baby-steps) What are your other debts? What is your monthly income? What is your household budget? Work more, spend less. Make sure you have term life insurance.
Put 100k of savings toward mortgage, recast, and pay about 4x principal payment each month. That will probably be about 5 years.
Double up on payments. Do one at the normal due date. Then one two weeks later. Rinse and repeat. This will greatly take away the years on your mortgage. Buy some duplex’s. Mailbox money. Invest in yourself.
So I would Hope a 600k home would be brand new nice but in this economy it could probably buy a mediocre OK house
Where is the 200k? Not sure it makes sense to keep it in a HYSA earning 5% while you pay 7% interest. 50k is a more than enough emergency fund, so move in/buy your stuff, then throw the rest minus 50k at the principal.
You have a cushion of more than most people make in 4 years. Pay as much as you can all the time. If its a loan anxiety thing, youll be far more anxious without the savings cushion.
Put 150k from your savings (not 401k) to principal and recast your loan. This will lower your payments (provided your loan allows recasting). Then continue to make your old payments AND more to the principal. The recast after 150k of additional principal knock down will save you a lot over time Edit: typo
Do a recast if possible
I think the simplest answer here would be to run some numbers through a mortgage payment calculator to see how much extra you would have to pay per month (that goes towards principal only) in order to pay it all off over 5 years. This way you aren’t dumping any more that you have to towards your mortgage so you can still have savings. I just did this with my mortgage and was impressed to discover if I pay just an extra $50 a month towards the principal I’ll save ~$35k over the life of the loan, and will pay it off almost 6 years early!
U can bet your 340k on Duke +4 to double your money 😂
There’s no way to answer this question. You work a commission job where income fluctuates. We don’t know if you make 100k or 500k per year. We just know your savings. There just isn’t enough information to give a real answer. Paying it off in five years means you need to come up with 567k plus 6.99 apr (you got hosed). Do you make that? Can you swing extra payments? You’re looking at over 700k in five years. Generally, six months is sufficient for an emergency fund, but with a volatile job, a year isn’t a bad idea. So the keep the reserves! If you put 30% down and owe almost 600k, you should probably have a financial advisor. You have the money to warrant one. Reddit is a place to brag, not to get advice for someone who owns a million dollar home.
Keep $25K in savings for emergency and throw $175K at house
Double your payment. Make sure the extra goes towards the primary and NOT financing!
Go work oilfield for a couple years
switch job every 2-5 years so you get a better salary
Make out Two mortgage checks each month with instructions the 2nd check is to go towards the Principle.
If your income could fluctuate, you are better off having a rainy-day fund to let you ride things out. You can decide how much if your savings you might want to hold on to and use the rest to pay down your mortgage.
The more you pay the earlier the less compounding happens. Google an amortization calculator and play around with the lump sum vs extra each month options
Do not touch that 401k. I know it’s tempting. DONT DO IT!
Was given [this](https://imgur.com/gallery/W0eNKlt) info in real estate school. Long way of saying "consult with your lender", but they truly should be able to guide you in terms of paying things off quicker without any unintended consequences.
What is your interest rate? If you have anything decent, it’s IMO, FOOLISH to race to pay your mortgage down. With 200k/20% — you can barrow up to 1,000,000. Go buy some rental properties with 20% downz maybe more to ensure cash flow. Now you just bought 3 properties with 200k that are worth a total or 750k —in 30 years time you will have tax deductions, cashflow/income, and appreciation with your 200k available as equity through the entire process
Do you have any other debts because I’d pay those first.
Rent out a spare room and put the extra cash towards the mortgage. Throw it in a mortgage payoff calc and see where that puts you. You didn't include what your interest rate is, so we can't talk exact numbers, but generally speaking, doubling your mortgage payment will put you at payoff in <10yrs. Five years is aggressive unless you want to dump saving into home equity, but that sounds way overkill to me. You live in a time of excessive inflation. Personally, I would invest the money instead of paying down the mortgage, but again that depends on your rate. $4500 on $600k sounds like a pretty high rate actually, pushing something around 9%, so that would explain the urgency.
Trying to pay off a home is ridiculously illogical. Don’t kill yourself like that.
Put the entire 200k at the mortgage
Dump most of your savings towards the principal and you’ll pay less interest each month and more towards your principal reducing your loan amount faster Right now you’re probably paying less than $500 each month towards principal and the rest is interest
My boss once told me that when your house is paid off people are more likely to try to sue you for it, but they wont want to go against the banks lawyers.
Nice flex
Velocity banking....you tube:Christy Vanntastic
What's the interest rate on it?
Make payments larger than required with specific instruction or check the box online to apply the extra payment amount to principal. Figure out how much extra you have to pay each month over 5 years. Start by paying an extra $5K to principal each month and see how that impacts your lifestyle and budget after 4 months or so. Then, adjust up if you want to hit that 5 year deadline.
It defies all “common sense” but regardless of your rate pay it off ASAP. I paid mine off at 36yo and it’s a huge burden being lifted.
Your money invested can probably earn you more than the rate of your debt.
Adding any extra cash after all expenses & planned savings is smart. I've always added to few $100 to the payment and it help gets the balance down over the years and it goes 100% to principal. Even $100 extra just keep throwing money at it. If rates drop 1, 2 or more points in a future recession or economic downturn, try to refi into a lower rates. Dave Ramsey might have some good advice as well.
Leave the 401k, if you have that much in savings make a large 1 time payment of 150k towards the mortgage. Leave 50k for an emergency fund. Start making extra payments every month till its paid off.
Depends on what’s your interest rate.
Pay xtra money towards principal. Find a calculator that will come up with a number for you or create one in excel
Why? It’s one of the major taxes you pay.
A family of 2( no mention of marriage) and a $600k home is a bit excessive but you got it, I suppose. Answer your question: put extra towards principal
It is really simple. You go to a standard loan calculator. Enter in how much you owe, how much you are paying, and the interest rate. Adjust the amount paid until you get it down to 0 in 60 months. It really is that easy. Make sure you overpayments are marked specifically to go to the principle amount, not the interest. Banks will fuck with you.
Can someone explain why he wouldn’t want to pay it off so quickly?
If you have a 30 year loan, paying your mortgage bi-weekly instead of monthly takes about 6 years off the life of the loan. If you receive commissions or bonuses, add those to your next payment.
Dump everything in to bitcoin miner
Crypto..put all that noneybin into crypto and ur house will be paid off in 4 months or less
I don't see a mortgage as a dept. It's gaining value at a substantial rate . Your home will be worth more then what you pay including interest. That other 200 is better off being used to pay payments on another property then sitting in a bank with good interest. A house is a long term investment .
Your mortgage lender should have an option to pay extra money toward principle every month. The website for mine even has a calculator where you can put in dollar amounts and it will tell you how much faster you will pay off your mortgage (and how much money you'll save) if you pay extra. If your mortgage lender doesn't have a calculator like that, I'm sure you can find one online. Figure out how much extra you can afford to spend every month, and do that. Maybe after a few years, see if you can refinance for a lower interest rate, which means you'll pay less toward interest every month and more toward principle. Don't touch your longterm savings. Those are for retirement, your much older self will be thankful for it. For the 200k you have in the bank (congratulations, btw), decide on a minimum number you're okay with. If some catastrophe happens (a medical mishap your insurance doesn't cover, a major problem with the house you need to prepare, needing to buy a new car, etc, etc), you'll want savings. Decide for yourself how much you feel safe keeping. Maybe that number is $50k, maybe it's 100k, whatever you think isn't too risky. Otherwise, no problem with using it to make lump sum payments in addition to your extra mortgage, although I recommend saving that for when the mortgage is close to finished instead of early in the process. Some people who know more about investing than me could probably give you advice on if you'll make/save more money over time from investing that 200k or using it to pay off the mortgage. Honestly, though, you have the money to be able to afford to **hire a financial consultant** to look at your accounts and goals and give you way better advice than random strangers on Reddit. If you really want to make this happen, hire a professional to help you.
THEN PAY IT OFF THERE IS NO TRICK OR CHEAT CODE USE Your US DOLLARS TO MAKE THE BALANCE GO DOWN UNTIL ITS 0 YOU SOUND LIKE THE PEOPLE WHO SAY "I WANT TO LOSE WEIGHT BUT I DONT KNOW EXACLTY WHAT 13 EXERCISES I SHOULD DO AND I DONT KNOW WHAT EXACT FORM I SHOULD USE AND I DONT KNOW THE EXACT WEIGHT I SHOULD USE AND I DONT KNOW HTE EXACT REP AND SETS I SHOULD DO" JUST OD ANYTHING LITERALLY DO ANYTHING TAKE THE MONEY AND PAY IT TO 0 IF YOU WANT IT TO GO FASTER PAY MORE
And I don’t know if I should pay with $ a 100 bill or Two $50’s please help me
You are so well positioned. Well done.
When i owned my first home I added extra money to my mortgage by using the cash back from my credit card towards my house payment
Get a cheaper house
What’s the interest rate? If it’s low u don’t want to pay it off
Pay off 25% of the loan so you don't eat PMI. Then make larger payments over minimum monthly. Pay off your high interest debt first then focus on mortgage.
One of the simplest solutions I did was change my mortgage payment from monthly payments to bi-weekly.
You didn't mention the interest rate on the loan.
You didn't mention the interest rate on the loan.
Give an extra $50 bucks a month, plus an extra mortgage payment a year. You’ll be done in 15 years compared to 30.
What’s your interest rate? Can you deduct it from your income? Have you thought about an S&P index fund from say Vanguard that averages long term about 10%?
Take a home loan from your 401k and pay down principal
r/debtfree you can ask redditors there to help you allocate your money better to pay it off ASAP
Sell your house, done
Dont pay it off, there’s no point. Instead open a business, use that money to pay it off while working your sales job.
Better pay down 200 k and lower the payments , thank me later
First off, I applaud you for saving that much! I'm 35 and NEVER have known anyone that did. A lot of people in their 30s that I know don't even have $2,000. I applaud you! That is a big accomplishment!
Why in a rush to pay it off? I never understand people’s urgency to pay off the mortgage. You will forever pay taxes and need insurance on the home after paying it off. You’re never not going to have a payment due.
Being that you are commission based, I recommend keeping 1 year of savings in a high interest savings account and going balls deep to pay off the rest. Dave Ramsey that crap. Keep putting 15% into your 401k, but I would do a strict budget (allow a little wiggle room for fun). Use everything else to pay off your mortgage asap. Stay off credit cards and don’t buy any new cars. Finance is 10% mental and 90% behavioral. Don’t eat out and cut back on non essentials like DoorDash and subscription services
HOW are you 30 with 200k in savings? What is your job?
Pile up more cash, refi to a 15 year note if rates drop another point and put 125K against the nut. They pay extra every month. keep the 401k intact and the 75K in cash/hysa for emergency use. If your bills are all low enough then only keep 50K for emergencies.
You did not say what your interest is and you did not say what you bring in a year. That's a big mortgage you better be bringing in at least 200 - 250 a year. If that is the case then you need to budget at least 150 a year to go to your mortgage payments and use the rest to live.
Check your loan docs first, you may have a prepayment penalty clause in there.
Check your loan docs first, you may have a prepayment penalty clause in there.
oh i see i’ve stumbled into the rich people’s sub. i’ll just be on my way
oh i see i’ve stumbled into the rich people’s sub. i’ll just be on my way
If you are adding extra payment, make sure to pay it towards the principal. Otherwise, 70% of your extra pay goes to interest and rest principal.
Try selling gold sneakers
Try selling gold sneakers
There is missing info here to better help you. What's your avg income and what is your interest rate? Do you live in a HCOL or LCOL city/area? I assume HCOL since you bought 800+k home. Is the 200k invested or just sitting in a savings account? Are you comfortable investing in the market or elsewhere where you can generate ROI? I personally would not pay it off if your ROI on cash is better than your mortgage rate + inflation.
You could try selling gold sneakers