Home > Battle of the Mortgage

Battle of the Mortgage

November 5th, 2013 at 03:26 pm

Guys I have a problem.

It might just be me, but EVERY single time I make a mortgage payment I argue with myself for at least 30 minutes.

I have a little voice on one shoulder going, "Why dont you put an extra $30 on that payment... or an extra $100. It would pay it off so much faster."

Then another voice is going, "Oh no. Don't pay extra, your trying to build up a savings fund. It would be silly to put more on a mortgage when you have so many other things to save for."

And I go back and forth and back and forth. Im serious! I have trouble writing out the amount every time, and Im sooo tempted to add a little extra.

How do you guys fight this? Is it okay to pay a little extra every once in a while to get some satisfaction? Or am I just crazy for even considering this when I haven't completed my Emergency Fund?

What do you guys do? Do you ever add a little extra payment just to feel like your getting somewhere?

In other news, my Mortgage is now $51,241.45

10 Responses to “Battle of the Mortgage”

  1. beawealthywarrior Says:

    I follow Dave Ramsey so basically you are on baby step 3. You should save up 3 to 6 months of expenses first. This is what he calls a Fully Funded Emergency Fund.

  2. momcents Says:

    I like my numbers even, as in $100, $200, $300 etc. I have rounded up additional principle payments as small as $9 to have the double 00s at the end of the balance. Everyone once in awhile I will make an additional month's principle (usually $500) but that is rare.

  3. Joan.of.the.Arch Says:

    I agree that you should increase your savings at this point. As homeowners with a low income and jobs that could end at someone else's whim, I think you have a strong need for savings. I'd even get the small personal debt paid off before paying extra on the mortgage.

  4. klarose Says:

    Joan of the arch the small debt will be paid on Monday.

    But I do realize that I should have a fully funded Emergency Fund before paying extra. Which is why I have not. But it's just hard to keep telling myself that. I am glad to hear it from other people though.

    But now if I had my EF complete. Would it then be okay to pay extra on the amount, even if other saving goals are not met?

  5. creditcardfree Says:

    It is NOT wrong to pay extra, but the amount should probably be in line with where the goal is on your priority list. Will you regret putting the money on the mortgage when you don't meet some other goal? I would really look at what your priorities are with your money. And remember is doesn't have to be either can put money towards all goals, but you won't move as fast.

  6. BuckyBadger Says:

    What's your rate? In today's low-rate environment, prepaying doesn't save you the sort of money that it used to.

    This is a quote from an article about prepaying low rate mortgages:

    Let's run the numbers: If you have a 30-year, $100,000 loan at 4 percent, your monthly payments will be $477.42 (none of the examples includes extra for real estate property taxes and insurance), and you'll pay $71,868 in interest over the life of the loan.

    If you make one extra payment a year, you'll pay off the loan four years earlier and save $10,000 in interest. But if you make a double payment each month, you'll pay off the loan in 11 years, and only pay $23,195 in interest.

    Why don't you get a bigger bang for your buck? Prepaying works better the higher your interest rate. If the same 30-year loan was priced at 7 percent, your monthly payment would be $665.30 and you'd pay $139,511 in interest over the life of the loan.

    If you made one extra payment per year, you'd pay off the loan six years earlier and save roughly $36,000 in interest. If you made a double payment, you'd pay off the loan in just nine years, and pay only $31,000 in interest a savings of $106,000 in interest over the life of the loan.

    So you're already saving a ton by having a lower rate. Try to focus on that, and appreciate the fact that you're saving all that money to work FOR you, whereas in 20 years after 20 years of inflation and raises and better jobs, that mortgage payment is going to be a tiny portion of your income and you're not even going to notice it.

    So unless you are the sort of person with the mentality that ALL DEBT IS EVIL AND SHOULD BE ELIMINATED AT ALL COSTS, as some Dave Ramsey people are, just pay your mortgage as planned and use the rest of your money for your other goals.

    I do "prepay" my mortgage in that I round up to $2,000 for mortgage, interest, and taxes escrow which leads to a $168.88 prepayment every month, but I'm not doing it to save money, I'm doing it because it's easier to do my math with round numbers!

  7. MonkeyMama Says:

    Does it really matter? So, send it to the emergency fund and build that up. & then if things go well and you don't need the money, you can always divert it to the mortgage later. I kind of prefer the "wait and see how things pan out" approach. Which means we might wait until 12/31 and weigh how the year went before directing extra money to the mortgage.

    So instead of stressing about it every month, maybe just make it a "once per year" kind of decision?

    I am also a strong believer in "emergency fund before all else". It makes life easier, in my opinion. I do throw little bits at our mortgage every month, but all our other financial goals are taken care of (emergency fund and retirement). Mortgage paydown is our only other financial goal of any note, so it gets all the snowflakes and windfalls right now.

  8. klarose Says:

    While I don't think all debt is evil. I would LOVE to be mortgage free, and would like to work towards that as soon as possible. But I know I have other goals that are more important and are taking my attention first.

    Our rate is current 6% and we will be refinancing next year.

    So maybe after I'm comfortable with my savings and my retirement I'll start throwing some money at it. That will probably be a while down the road though.

  9. LuckyRobin Says:

    My mortgage payment is $375.86. Back when we were very poor I would still try to at least round it up to $400 every month. It was not much, but it was something and it made me feel good to do just that little bit for the mortgage while still working on my other goals. Nowadays I pay between $700 and $1000 a month on it while funding other goals. How much depends on what I am saving for in other areas. Some months the mortgage gets more, other months the other goals get more.

  10. Petunia 100 Says:

    I wrestle with this very thing too, Klarose. Even though I have other goals, it is just FUN to send a bit extra to the mortgage. So, I just round my payment up a bit and throw snowflakes at it. Smile

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