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re: When does it make sense, mathematically, to accelerate mortgage payments?
Posted on 12/6/23 at 12:58 pm to Gorilla Ball
Posted on 12/6/23 at 12:58 pm to Gorilla Ball
I'll give a different set of advice. There's 0 reason to pay the bank more than your payment until you can pay the entire thing. The bank having more of your money doesn't change your future payments. Better advice would be to put away money into an interest accruing account like a money market or investment account and save up until you can pay your mortgage off.
If you ever need the money for an emergency, its a hell of a lot easier to use your own money then get a bank loan.
Paying extra on your mortgage really doesn't get you any perks from a banker. It just pays your loan down. Yes more will go to your principle, but I'm not convinced that's better than saving it in a 3rd account. If you are responsible enough to pay extra then you are likely responsible enough to do this.
If you ever need the money for an emergency, its a hell of a lot easier to use your own money then get a bank loan.
Paying extra on your mortgage really doesn't get you any perks from a banker. It just pays your loan down. Yes more will go to your principle, but I'm not convinced that's better than saving it in a 3rd account. If you are responsible enough to pay extra then you are likely responsible enough to do this.
4
Posted on 12/6/23 at 1:20 pm to baldona
quote:I'm basically in the camp of, not only don't pay it off early, but try to get the very longest mortgage you can ever get.
I'll give a different set of advice. There's 0 reason to pay the bank more than your payment until you can pay the entire thing. The bank having more of your money doesn't change your future payments. Better advice would be to put away money into an interest accruing account like a money market or investment account and save up until you can pay your mortgage off.
Think of it this way: where else can you get 30 year debt, at low rates with no ability for the lender to make a margin call? Literally, all you have to do is make the same monthly payment year in and year out and there's nothing the lender can do to worsen your lot. PLUS, YOU retain the free option to refinance to a lower rate anytime you see fit. IMO, mortgages are mispriced in favor of the borrower.
Also, I just don't see the argument for feeling better about paying it down - it LOWERS your cash on hand. That seems LESS secure to me.
Posted on 12/6/23 at 1:33 pm to baldona
quote:
The bank having more of your money doesn't change your future payments.
It does if you want the ability to recast your current mortgage in a time of need.
Posted on 12/6/23 at 3:35 pm to baldona
Great information thanks for sharing.
Posted on 12/6/23 at 5:01 pm to baldona
quote:
If you ever need the money for an emergency, its a hell of a lot easier to use your own money then get a bank loan.
which is why if u wanna pay it off do it in chunks using velocity banking with a big LOC or HELOC so you always have access to lots of money if it takes you awhile. instead of having it locked away with the mortgage company.
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