Pay Off the Mortgage Early

Last year I shared how I can’t bring myself to pay extra on the mortgage. Fortunately, since then I’ve been able to bring myself to make a few additional principal payments on our mortgage, and I love seeing them applied directly to principal.  It’s a great feeling.  However, we have many more years to go and many more mortgage payments to make.  So far we’ve eliminated at least one mortgage payment off the life of our loan, and it feels awesome.

When we refinanced our mortgage a couple years ago, instead of going with a 28 year mortgage (the amount of time that we had left on our original mortgage), we stretched it out to a 30 year mortgage to get a lower payment.  One of our goals is for me to be a stay at home mom whenever we do have kids, so that was a huge factor to us.  We figured we can always pay extra on the mortgage if we choose, but we can’t pay less.  It’s worked out well for us so far, and that’s really all that matters.

But since we’re completely debt free now except for the mortgage, I’m thinking about stepping it up a bit and making even more extra payments and hopefully for even more money.  I’ve shared my reservations about paying extra on the mortgage before, but they mainly are these: I don’t know how long we’ll actually own this house, and what if we need the money?

I calculate the amounts for us to pay off the mortgage in so many years versus refinancing.  I don’t want to refinance our mortgage right now because we’d have to pay closing costs, we’ve already got a pretty good rate, and I don’t know how long we’ll be in the house.

-To pay off our house in 26 years (the original amount of time we’d have left if we had kept our original mortgage), we have to pay $22 extra a month.
-To pay off the house in 20 years, we’d have to pay an additional $135 per month.
-To pay off the house in 15 years, we’d have to pay an additional $308 per month.

Since one of our goals for this year is to live on one of our salaries, I’m thinking about taking a portion of my salary and applying it directly to the principal of our mortgage.  I’m thinking that $200 a month is an amount that won’t break the bank if we really needed it, and it will make a nice dent in the mortgage.  If I can continue that amount, we’ll have the mortgage paid off in 18 years.  Wow.  Of course, if I’m unemployed or Mr. Money is, we’ll have to change our plans and probably stop the extra payments.  For now though, I think it will definitely work for us, and I am happy that finally I’ve come up with a plan.

I’m going to keep plugging away at the mortgage and watching the balance go down. I can’t stand to see the thousands of dollars each year we spend in interest for the mortgage.

Do you think it’s a good idea to pay off a mortgage early?

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I Want to Sell my House by Owner and Buy a New House

This afternoon I had a genius idea.  I decided that I want to sell our house and buy another that will fit our lifestyle a little bit better.  The house we are in now is a perfect size (it’s about 1500 square feet and we don’t use two of the bedrooms plus the dining room) but is on a little less than an acre.  I really want to get chickens, and we actually can because there are no ordinances against it here but it would be nice to have more property to be able to put them farther away from the house.  Also, if we could get a house with more property, I could bring my horse down here, be able to have one milking goat, and any other animals I’d like.  Plus, our dogs would love having more property to run on, and I could have a bigger garden to help with our dream of self-sufficiency.  I’ve always wanted to live in a house with woods on the property and room to run.

However, I think it’s kind of silly to swap our house for another of the same price.  Of course, I went online today to do some searching and I came across a house that’s listed for less than we should be able to sell ours for that has three bedrooms plus one bath (one less than our current house) but is on almost four and a half acres.  Swoon. Of course, it looks like it needs some minor home improvement on the inside, and I’m willing to do it myself.  After all, I’ve spent the past almost four years installing new flooring, tiling, painting, and replacing trim in this house.  I can pretty much do any home improvements I want to do as long as I have the proper tools.

I love the idea of moving into a new house, especially one that has property that we really could use and start to live out our dreams.  Our current house is awesome, but isn’t conducive to our dreams.

Benefits of Selling Our House and buying a new one

-We’d be able to have a farm with animals and have a huge garden that we’d be able to grow more of our own food.  I’d be able to have a goat to milk, chickens for eggs, and bring my horse down here to live with me.

-I’d have a new challenge with painting and remodeling the house.  I could decorate it completely different than our current house if I so desired.

-I’d have property to have all the animals my heart desires!  I’d be living my dream!

-We could possibly get a lower rate on a new mortgage (with a shorter term than we currently have) and put more money down so we have more equity than we currently have.

Drawbacks of Selling and Moving

-It would cost us money.  We don’t know how much we could get for our current house.  We’d have to pay closing costs for a new mortgage which could run us $3,000 or so.

-We’d have to stress about getting this house 100% sale ready, work on showing it, keeping it clean, etc.  Then we’d be stressed about selling it.  Plus, who knows how long it would take to sell.

-I don’t know how long we’ll live in this state.  With Mr. Money’s job, we’re pretty sure we’ll be here at least another two years.  A part of me wants to make the most of the time and maybe even stay longer by buying this new house that’s more suited for our needs.  Another part of me thinks it’s crazy to even consider this at all.

Tonight I think this is a fabulous idea and I’m ready to start packing to move to my dream property.  The realistic part of me thinks of how crazy of an idea it sounds, and maybe we should not even consider it and focus on our current house instead.

Do you think it’s silly I’m thinking about selling our house and buying a new one?

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Should I Refinance my Mortgage?

Last June we refinanced our first and second mortgage (I didn’t follow my own tips for a first time home buyer) and secured a lower mortgage rate.  We signed for a 30 year mortgage in order to keep the payments low.  We wanted to know we can afford the payments so I have flexibility in my career.  You never know, I may want to be a housewife one day and I want to know I have that option!  When we refinanced our mortgage, we went with a loan that didn’t provide an escrow service for us, so we had to do that ourselves.  Not a problem; we actually enjoy saving money ourselves for homeowners insurance and property taxes.

Thankfully, the closing costs of refinancing only were $150.  The only drawback?  There is a prepayment penalty on the loan, and the only way I can avoid a prepayment penalty is if we make a large payment on the loan and then wait a day and pay the rest.  I don’t know about you, but I don’t have over $100,000 just sitting in our bank account, so we’ll eventually have to pay a prepayment penalty that will likely be over $1,000.  I was aware of this prepayment penalty when we refinanced, and we had no closing costs, so I’m not going to complain too much.  Had we gone with a conventional mortgage refinance, the costs would have been a lot greater.

Anyway, my point here in all this is that I’ve been considering refinancing again.  Mortgage rates are at a historic low, and I’d love to get a mortgage in the 3-4% range.  That would be awesome! I checked today, and we could refinance for as low as 4.32% and our payment would be about $150 less than they currently are if we went with another 30 year mortgage.  Of course, I know we’ll pay closing costs with this mortgage so I’d have to factor in about $1500(?) for closing costs, plus the prepayment penalty from our current mortgage (at least $1300).  With that alone, I’m looking at $2800 just to get a lower rate!  I’d make that up in 18 months, and we plan on staying in this house for at least that long.  However, I don’t know if it is worth it.  I’ve thought about trying to refinance into a 15 year mortgage, but I don’t know if I’d want the higher mortgage payments each month.

I think I’m just going to keep our current mortgage and maybe start paying a little extra on the principal each month as I see fit.  At least then I’d be saving myself money that wouldn’t be going towards interest.  Plus, I feel like I’m “making” 5.59% on my money then, and we know there aren’t any savings accounts or certificates of deposit that are paying that right now!

I’ll be honest: the 3-4% mortgage interest rates are really tempting, and I almost wish they weren’t that low so I wouldn’t be tempted!  It’s so hard to decide how to handle money sometimes. I think as long as we live below our means, we’ll end up fine and I shouldn’t worry about it so darn much.

Do you think I should refinance my mortgage?

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