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?