Your Questions About How To Pay Off Mortgage Early

Helen asks…

How long would it take me to pay off my mortgage early?

If I owe 160,000 and the regular payment is 1600/month (including insurance) how long would it take to have it paid off? I got the 30 year loan 8 years ago. Should I pay it off early?
Interest rate is 6.75

richmama answers:

That all depends on your financial situation, long-term goals, interest rate, etc…

Here are some considerations:

1) Your house is a LIABILITY – unless it puts money IN your pocket, it’s a liability. It’s an asset on the BANK’s balance sheet. Tax write offs…sure, but look at how much interest you’ll pay over the course of the loan. Figure that you’ll basically pay double for the loan. If you can pay it off in 20 years vs 30, you’ll save thousands in interest. If you invested that into a mutual fund, real estate (rental property or buy/flip), you’d stand to make a lot more than a write off.

2) What’s your overall debt situation? Do you have lots of credit cards, loans, dept store cards, etc…? If you can make the mortgage payments, and you have a lot of cc debt, it may make more sense to pay off the higher interest rate debt first.

Consult with a financial expert / tax expert etc… For specific advice.

I would also point you to “Smart Women / Couples Finish Rich”, by David Bach. They are two books. Great advice on money.

I wish you Peace.

Mandy asks…

Is there a limit of how much you could pay off the mortgage early – every year ?

1) If I am planning to pay off mortgage debt early, is there a limit as how much I can
pay off every year ?

2) While filing taxes is there a anywhere in IRS forms I need to specify the amount of dollars
I added to the principal mortgage amount ?

3) Does the lender or IRS ask me as how i paid that much of mortgage debt early ? definitely coming from my bank account only.

richmama answers:

Any government insured loan, FHA, VA, Fannie-Mae, or Freddie-Mac there is no pre-payment penalty.

If it is not then most likely there is some kind of pre-payment penalty within the first 10 years or so. Just read the note and deed. Most such loans will allow the borrower to pay off a maxiumum of 10% additional of the loan amount per year.

The only thing the lender reports to the IRS is how much interest you paid during the year. Paying off a mortgage early will not trigger an IRS audit. Banks do report to the IRS of every money transfer of funds in one day over $10,000.

William asks…

I would like to no if anyone now how to pay off a mortgage early, is it principal or interest that one pays o?

would like to pay off mortgage early

richmama answers:

Anything extra goes to principle. A good way to pay it down soon is to pay your mortgage every two weeks instead of every month, and to take half of your tax refunds and/or bonuses and throw them into your payment.

Lisa asks…

Should I pay off my mortgage early or use this money to invest some where?

I still have 25 years of mortgage,I also have 3 months of saving , 401K, IRA, Life insurance, living Trust….poeple offen said do not pay extra to your mortgage, use this money to invest, by the time I pay off my loan at 25 years later, I will be better off more money and own home free. Is any body do very sussefully in this way and how you get their.

richmama answers:

Paying off your home is a good investment, but usually not the best one. Investing in the stock market usually beats it, and buying another property, if you’ve got the cash flow, blows it out of the water.

I actually answered this in depth, with numbers, here:

http://www.searchlightcrusade.net/posts/1139361917.shtml

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