Mortgages

I have a 30-year fixed-rate loan on my house. I’ve decided that I’ll pay extra to the principle since I’m in a position to do so. My house payment, insurance and taxes are all rolled together. I think the house payment is like $430 or so. I’ve been paying on the house for two and a half years. How much sooner would the house be paid off if I paid an extra $500/month? $600/month? Or how about $100/month? A guy wants to buy one of my cameras. What if I applied the $1,200 from that to the loan?

Depends on your interest rate.

5.375%. (I had to get a higher rate because I financed it as a ‘second home’.)

Also depends on the current principal balance.

Under $75k remaining.

There are plenty of mortgage calculators out there. Just do a search for “mortgage calculators”

Before you do anything, find out if your bank allows you to pay off your mortgage early without a penalty. My realtor told us that she once worked with a couple that were hit with huge fines when they did this.

I was using this calculator recently:

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

It has a section where you can try out different ongoing or one-time payments to see how it affects your pay-off date.

California, I believe, does not permit early payoff penalties. IANAL

Looks like I can pay it off in five years if I pay an extra $600/month and apply the $1,200 from the camera as a one-time payment. Not bad. I’ll see how long I can keep it up. Thanks for the link.

I asked about that when I got the loan. They said there is no penalty for early payment.

BTW: Did someone send me an email? It does mention the thread, but I just want to make sure before I allow the mail into my inbox and open the Excel file. (Thanks, and sorry for my paranoia.)

Contact your mortgage lender or peruse your mortgage paperwork before you start making larger-than-expected payments.
You may have to specify that you want the excess to go to principal reduction; otherwise they might credit you as if you were simply pre-paying the next month’s payment.

I am not a lawyer either, but I have dealt extensively with mortgages in California and most other states. Most states in the country, including California, allow early payoff (AKA “Prepay”) penalties on most types of mortgage. If a loan does have a prepayment penalty attached, the borrower must sign an addendum that clearly shows the terms of the penalty at the time that they sign all the other loan documents just prior to the loan being funded. Any borrower who keeps a copy of the paperwork can refer to it if they are unsure if a penalty applies to them, or call the number on their monthly statement.

Some banks will automatically apply extra money toward principal, as long as you have no late fees or escrow defiency. It’s a good idea, though, to indicate that on your payment anyway.

You may also want to see, if your loan to value ratio is sufficient, you may be able to drop the mortgage insurance. I, sad to say, cannot drop mine unless I want to refinance (FHA loan).

The online form for my bank has a box to check for payment to principle.

My downpayment was sufficiently large so that I did not have to get mortgage insurance.

Then pay that puppy off! Remember, you’ll have to set aside money for property taxes after you own it free and clear, since they won’t be coming out of your escrow, but think how much money you’ll be able to invest!

Congratulations! I pay a bit extra on my mortgage each month, but it’s rather small. I just round up to the nearest hundred. I figure it’s better than nothing.