Your Questions About How To Pay Off Mortgage In 5 Years

Sandra asks…

How much more do I have to pay to pay off a 30 year fixed mortgage in 5 years?

I have a brand new loan and my first pmnt is June 1st. My monthly payment is $499.29. How much more do I have to pay to pay off a 30 year fixed mortgage in 5 years?
Loan Type and Term; 30 Years Conventional
Original Principal Balance $100,000.00
Contractual Remaining Term 30 years
Interest Rate 4.375%
Current Principal Balance $100,000.00
Principal and Interest $499.29
Interest Paid $11.99 YTD

richmama answers:

You should pay $1849.57/ month as EMI to complete the loan in 5 years. Use PMT formula in excel.

Carol asks…

Paying off my mortgage in 5years instead of 10 years?

I owe about 109,000 in 10 yrs mortgage, how much more per month would I have to pay to have it paid off in 5 yrs vs the 10 yrs?

richmama answers:

The $2107 per month answer, from the other gentleman, is correct. You can download software that I wrote, which will work for free for 5 days, to run different scenario’s.

I also wrote an article that describes how to do the mortgage calculation, if you are interested.

Helen asks…

How practical is it to have a mortgage paid off by age 30?

Lets say it’s a mortgage for a $95,000 condo with 25% down payment and ~6% APR. The monthly association fee is $250.
Lets say I make $40,000 a year (pre-tax) and live relatively cheaply, so I can pay extra on my mortgage every month.
How practical is it to have it paid off in 5-6 years?

richmama answers:

Here is a tool that may help you. Its a mortgage calculator provided by Coldwell Banker Hubbell Briarwood. You can find it at http://www.cb-hb.com/mortCalc/calc.html and can also be added to any website. Hope this helps!

Richard asks…

If I get a cheap condo and have it paid off in 5 years, then what do I do?

I’m 24 & have been saving a lot of $. I currently make $30k/yr, and I would like to buy a condo that costs $60-70K My goal is to have it paid off within 60 months.
I should be able to put down 20-25 %, so I won’t have to pay mortgage insurance. Also, I live rather cheaply, always looking for good deals, and paying for all purchases (vehicles, etc) in cash.
2 questions:
1) How practical is it for me to have it paid within 60 months?
2) If I don’t have a mortgage payment once I am 30, what do I end up doing with all the money I’m not putting towards a mortgage/interest? (it almost seems too good to be true?!?!?!)
Thanks for your insight!!!

richmama answers:

I was you a couple of decades ago. Thought just like you too. It’s a lofty goal. You’re going to quickly discover home ownership comes with a host of other costs which will utilize your disposable income. Here are some examples:

— Interest (instead of making interest on your savings, you’re now paying a bank interest charges for lending you the money).
— Property Taxes
— HOA fees (you did say Condo)
— Utilities (except for trash collection which your Condo HOA fees will cover).

If you still think you have enough extra money to pay down Principal over 60 months… Then you haven’t a woman in your life. And, trust me on this, when you own your own place a woman will find a way to your heart… And then take over your dwelling. And, when this happens, you won’t have ANY money left over to pay more than the regularly scheduled mortgage payments (i.e. Over 30 years).

Edit: Did some calculations for you….
For a 70K place with 20% down, you have a 56K loan. You can get a 5% 30 year fixed rate in todays market. To pay that loan off in 5 years (60 months), you’ll need to pay $1056.79 per month in P&I. This is 42% of your gross income. You’ll need $700 a year in property taxes (i.e. $58.33 / month) and the HOA fees.

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