Hey, Frozen Mike!

[1stTimeCaller]

I'm trying to figure out how much shorter my mortgage will be if I pay half my mortgage every two weeks. Instead of $X on the first I want to pay .5X on the 15th and .5X on the 30th.

I'd also like to fugure out how much shorter it would be if I applied an extra amount and instead of .5X every 2 weeks it was .6 or .7X.

Any help? Anyone?

[Mongo]

get to work lazy bastard
http://www.calculator.org/jcalc98.html

[Frozen Sooner]

Hard to answer without the interest rate on your mortgage.

[1stTimeCaller]

6.625%

[yermom]

if i knew the amortization schedule i could probably figure it out

if you pay every 2 weeks that is like 26 .5x payments, as opposed to 24 .5x payments if you do the 15th and 30th, but i'm not really sure that is any different than 12 1x payments

do they give you a break on interest if you pay .5 of a payment 2 weeks early?

[Frozen Sooner]

According to my calculator, you'll save about 4 years off the back end of your mortgage.

[1stTimeCaller]

I make my first payment on the 1st. I then make a 1/2 payment on the 15th then another half on the 30th. I only pay interest on the entire amount for 14 or 15 days. That's one way it is supposed to save you in the long run and also paying 13 whole payments helps out a little as opposed to the normal 12.

IIRC, OUAndy1807 and I had to do problems like this in Construction Economics and paying twice a month on a 30 year note it should save you about 5 years on a 30 year note but I didn't really pay attention.

I have no idea how to plug the numbers into my calculator.

[1stTimeCaller]

According to my calculator, you'll save about 4 years off the back end of your mortgage.

that's at the .5x every two weeks? What about .6x or .7x?

Thanks.

[BajaOklahoma]

I have no idea how to plug the numbers into my calculator.


Kids now days! :eek:
Put your finger on the number button and push. Make sure it is the number you want.

[1stTimeCaller]

there are also letters on my calculator. :(

;)

[Frozen Sooner]

Well, you kind of need a financial calculator anyhow.

@ .6 a payment bi-weekly you cut 14 and a half years off your mortgage.

@ .7 a payment bi-weekly you cut off about 17.5 years off.

And I misspoke on the first one. You actually cut off six years.

[Howzit]

What if you make pi/e payments every 10 days?

[RacerX]

if you pay half your mortgage every 2 weeks?

4-5 weeks, duh.

[RacerX]

Run the numbers on paying 1 and 1/12 of a payment each month.

[Frozen Sooner]

It knocks exactly six years off the loan. Which makes sense, because it's basically the same thing as making 1/2 payment biweekly. You turd.

[OUAndy1807]

Who is IIRC?

What does it do to the life of my mortgage if I pay only interest?

[1stTimeCaller]

IIRC=If I Remember Correctly.

Thanks again errbody. Big kisses for Mike Rich, if that is your real name.

[sooner_born_1960]

Did anyone mention that paying on the 15th and 30th is not the same as every two weeks?
I always wondered what iirc meant. Thanks for asking.

[1stTimeCaller]

I didn't explain it well enough. I will be paying every two weeks not just on those dates. Those are just the dates of the first month for my schedule. My first payment is due June 1st and then the 1/2 payments start on whatever those dates are.

I guess when I get excited that I get three paychecks in a month I can also be sad that I have three payments that month. :(

[Harry Beanbag]

I wish I could be like Bruce and just write a check for the full amount whenever I felt like it. :O

[1stTimeCaller]

Who are you trying to kid? We all know that you could but when your money is making 34% and your mortgage is 2.25% you just don't want to.

[Harry Beanbag]

Who are you trying to kid? We all know that you could but when your money is making 34% and your mortgage is 2.25% you just don't want to.


Oh yeah, I forgot about that. :)

[Hamhock]

are you doing this on your own, or is it part of a program they're trying to sign you up for?

[C&CDean]

Alright, how about this scenario: Your regularly scheduled mortgage payment is $1788 per month. You send $1900 per month with the overage to go to principle. An extra $118 a month on a 30 year note at 5.25%. Every month. How much do you take off the end of your note?

[Hamhock]

Alright, how about this scenario: Your regularly scheduled mortgage payment is $1788 per month. You send $1900 per month with the overage to go to principle. An extra $118 a month on a 30 year note at 5.25%. Every month. How much do you take off the end of your note?


didja see my bobcat? :texan:

[C&CDean]

Nope. It's still a red x.

[1stTimeCaller]

are you doing this on your own, or is it part of a program they're trying to sign you up for?
100% my idea.

Well, not the idea that paying extra principal each month reduces the life of a loan and total interest paid nor the idea that 2, 1/2payments a month or a half payment every two weeks (yes, I know this is different that twice a month) also reduces the life of your loan and total interest paid.

My idea was to do both to further decrease the life of my loan.

What does Dave Ramsey have to say about that?

[Mjcpr]

You would be better off by just sending in one payment for the entire mortgage and save yourself 30 years of stamps.

[Paperclip]

100% my idea.

Well, not the idea that paying extra principal each month reduces the life of a loan and total interest paid nor the idea that 2, 1/2payments a month or a half payment every two weeks (yes, I know this is different that twice a month) also reduces the life of your loan and total interest paid.

My idea was to do both to further decrease the life of my loan.

What does Dave Ramsey have to say about that?

Paying off a home early is kinda low on his list of recommendations.

[mdklatt]

With a fairly low interest rate, it seems like you'd be better off investing that money.

[Hamhock]

100% my idea.

Well, not the idea that paying extra principal each month reduces the life of a loan and total interest paid nor the idea that 2, 1/2payments a month or a half payment every two weeks (yes, I know this is different that twice a month) also reduces the life of your loan and total interest paid.

My idea was to do both to further decrease the life of my loan.

What does Dave Ramsey have to say about that?


Not sure what Dave says. He's all about getting out of debt, so i'd be surprised if he was anything but for it. I assume you don't have any other consumer debt?

My reason for asking is that I know that some of the mortgage companies are pushing a product whereby they deduct 1/2 of your pmt twice per month (or every two weeks, i can't remember). They charge fees and there is usually a catch. Some serious number crunching needs to be done before signing up for one of these.

[Frozen Sooner]

Alright, how about this scenario: Your regularly scheduled mortgage payment is $1788 per month. You send $1900 per month with the overage to go to principle. An extra $118 a month on a 30 year note at 5.25%. Every month. How much do you take off the end of your note?

Don't have my financial calculator handy. PM me on Thursday and I'll run the numbers for you.

[1stTimeCaller]

this didn't cost anything. Like I said, I had worked problems like this in the past, increasing the frequency of payments, and I thought it took off roughly 5-7 years on a 30 year note. I had never crunched the numbers with doing that and paying exta principal payments. Heck, I wouldn't know where to start other than asking Mike or another loan person.

I'm trying to get everything I have paid off as quickly as I can. I have no idea how long the good times are going to last in the oilfield and I don't want to be one of those guys. I spent half the amount I was approved for on a house. I pay extra on my trailer that I use for work. I pay extra on the truck I have for work. Those are the three payments I have other than insurance for all three, water, elec, gas, TV.

I was going to put all my extra money towards my truck then the extra plus truck payment towards trailer then all that towards the house like Mike recommended but another friend of mine pointed out that all debt is debt and paying extra towards them all at the same time would do just as good being as the interest rates are so close to each other. I also don't get to drop anything like PMI on the truck or trailer when I reach a certain percentage paid for.

I hope that makes sense.

[Frozen Sooner]

1TC-

Just grab yourself a financial calculator and run some TVM equations.

Actually, Excel will do it. I'll run Dean's problem right now.

[1stTimeCaller]

hey Dean

http://www.bankrate.com/brm/mortgage-calculator.asp

[Frozen Sooner]

Dean-

I'm going to need a couple of pieces of information. First, does that 1788 payment include taxes and insurance? If so, I need to know the portion that goes to T&I. Assuming that it's a straight P&I payment, I'll figure that your original balance was around $324k. Sending an extra $112 per month will cut about 47 months off your mortgage, assuming you started with the first payment.

[Hamhock]

believe it or not, i got a letter from my mortgage company on one of these programs in the mail today. there is a hitch..i'll post it tomorrow.

[Frozen Sooner]

Yeah, they seem to think that they have to do anything BUT put your payments on top of those that satisfy interest towards principal. I can't think of any reason why I'd ever pay a fee to make my on-time payments in any manner I damn well please.

[Hamhock]

Here's what I got in the mail yesterday from Washington Mutual. If you read all of the fine print.

They deduct 1/2 my mortgage payment every two weeks. (The appeal, as they put it, is that this coincides with my paychecks).
They still only pay my mortgage on the 1st of every month.
They collect the interest on my money they hold.
By doing this, they trick me into making 1 extra payment (2 half payments 'cause of 26 weeks in a year) per year.
They charge me $9.00/month to do this.
This cuts off 4 yrs and many thousands of dollars off my mortgage.

Eat it Washington Mutual :texan:

I've actually had friends bring me their offers to evaluate where the mortgage company is doing all of the above and charging a fee $99-$399 for enrollment.

BTW, Dave is very much in favor of paying off your house early. He says you should have all other debt gone and be socking away 15% pre-tax first though.

[1stTimeCaller]

Thanks Hamhock. I called them to make sure that the payment was applied when they got it.

She said no it is applied when they take out the other half.
I told her that was silly and to cancel me from the deal, that they were ripping me off by not applying my payment when I make it.

She told me that the interest was calculated monthly and it wouldn't help me any.

I then asked her if she was telling me that the payoff on my loan on June 2nd is the same as the payoff on June 30th.

She said no but that's different, a payoff isn't simple interest.

I told her that neither was my loan, and to cancel me from their scam, I can make an extra payment on my own when I choose, not at the end of the year.

She said it's not a scam, you are saving 8 years on the loan by doing this.

I told her that if my payments were applied when I made them I would save over a decade because that's how compound interest works.

I guess I should send more to my savings each week and then make my truck and house payment from my savings account?

[Paperclip]

Do you have a limit on the number of withdrawals you can make from your savings account per month? A lot of places allow you three or so before you get charged. Concerning Dave, Hamhock Johnson is right. To carry it a little further, Dave would say pay off all debt except the house, have 3-6 months of expenses saved in an emergency fund and invest 15% of your income in Roth IRAs and pre-tax retirement. If you still have extra after all that, then you pay additional on the house.

[Frozen Sooner]

Thanks Hamhock. I called them to make sure that the payment was applied when they got it.

She said no it is applied when they take out the other half.
I told her that was silly and to cancel me from the deal, that they were ripping me off by not applying my payment when I make it.

She told me that the interest was calculated monthly and it wouldn't help me any.

I then asked her if she was telling me that the payoff on my loan on June 2nd is the same as the payoff on June 30th.

She said no but that's different, a payoff isn't simple interest.

I told her that neither was my loan, and to cancel me from their scam, I can make an extra payment on my own when I choose, not at the end of the year.

She said it's not a scam, you are saving 8 years on the loan by doing this.

I told her that if my payments were applied when I made them I would save over a decade because that's how compound interest works.

I guess I should send more to my savings each week and then make my truck and house payment from my savings account?

You're confused as to the difference between compound and simple interest. Trust me, your home mortgage is not compound interest.

Read your federal disclosure statement on your mortgage. It should include a statement on how payments are applied and how interest is calculated.

[1stTimeCaller]

Regardless, Wells Fargo's AOP is a POS. It doesn't do anything other than make it easier to make one extra mortgage payment per year.

When I read about it online I thought the payments would be applied when made not sat on until the 1st of the next month. **** those people, I'm going to apply all of my extra money to get that loan paid off in 1/6th the time of the loan's term.

And if the payoff on my note isn't simple interest like the Jennifer at Wells Fargo said then what type of interest is it?

[Harry Beanbag]

Do you have a limit on the number of withdrawals you can make from your savings account per month? A lot of places allow you three or so before you get charged. Concerning Dave, Hamhock Johnson is right. To carry it a little further, Dave would say pay off all debt except the house, have 3-6 months of expenses saved in an emergency fund and invest 15% of your income in Roth IRAs and pre-tax retirement. If you still have extra after all that, then you pay additional on the house.



Damn, I wish to God I had extra after doing all that stuff. :(