has anyone paid off their morgage early?

[DesertFlower]

we owe a little more than $62,000 and we've decided to pay it off. we're at 6% and getting less than 1/2% on our savings.

[hobbit709]

1. Mine will be paid off in about 2 months.

Been sending extra money each month and paying it off about 4 1/2 years early.

[Yupster]

2. I have owned two homes

and paid off both very early.

It's been nice not having a mortgage the last 10 years, but the house still costs a lot when you consider taxes, insurance and upkeep.

[DesertFlower]

6. we don't have an escrow account.

we've been paying our taxes and homeowners for 8 years.

[demosincebirth]

11. especially if you live in the Bay Area like I do.

[DesertFlower]

13. our taxes are $3200 a year and homeowners is $800.

we're in arizona.

[demosincebirth]

35. Thats a lot of taxes, but divide yours by 2... in a middle class neighborhood

[DesertFlower]

39. our house is on 2-1/2 acres. it's 2700 sq. ft. livable.

i guess the neighborhood would be considered upper middle class even though our home values have dropped.

[DesertFlower]

5. we've been paying and extra $300 a month for

8 years. the original mortgage was $120,000. i just wonder if there are charges from the bank involved? i can't call them till monday. hope they just give me the payoff amount so i can send a check.

[Roselma]

18. Check your mortgage papers. They likely have a clause about

early repayment. Ours did, and there was no penalty for early repayment.

[brooklynite]

3. We paid off years ago...

If you can afford the cash up front, it's one less thing to worry about, and you won't miss the mortage deduction on your taxes, since the share that's interest drops each year.

[DesertFlower]

8. that's the reason. if we were

getting a decent interest rate on our savings we'd keep it for the interest deduction.

thankfully we can afford the cash upfront.

[we can do it]

4. Yes, did it and am thrilled...found out I didn't really need to pay the bank

3 times what we paid for the house. I try to pay as little interest as possible. I'd rather scrimp a bit for a few years that to throw away all that money.

[proud2BlibKansan]

7. Yes paid ours off several years ago

Still have to put aside several hundred dollars a month for taxes and insurance though. We had a pretty affordable mortgage so we aren't saving more than a couple hundred a month.

But we prefer being as debt free as possible. So it feels good knowing the house is paid for.

[DesertFlower]

12. our payment is $729 a month and we've

been paying an extra $300 for 8 years. this will make us debt free.

our cars were bought with cash.

[proud2BlibKansan]

20. Ours was around $650 I think.

But taxes and insurance are close to $3000 a year. That really blew me away. I thought they would be lots less than that.

[DesertFlower]

27. our taxes and insurance come to about

$4,000 a year, but since we've been paying them ourselves it's not a big deal. comes to a little more than $300 a month.

[DesertFlower]

14. are there any bank charges? do i just

call and ask for the payoff amount and send them a check?

[proud2BlibKansan]

16. I don't remember if there were any charges but I don't think so

I just called to get the payoff amount and paid it. Our bank is local so I went in person. I was thinking I would need to do a cashier's check, but they took a regular check. Boy that was strange writing a check for that amount. LOL

[pacalo]

21. No extra charges for us.

[Little Star]

33. All mortgages are written differently. Ask if there is a penalty before

you just send a check.

[Gaedel]

41. They might

try to beat you up for a "closure charge" or a "title clearance charge" but it should be less than $100.

[CrispyQ]

9. We paid our off about 10 years ago.

We spent the first several years socking those payments in the bank. It has provided us options we would not have had if we still had a mortgage payment. My husband took a few years off to kick back & re-tool his career & early this year I started my own business. These things would not have been possible with a mortgage payment.

And like Brooklynite said, the interest is less & less every year, so the tax write off becomes less incentive.

You will feel so liberated when you write that final check! Congrats!!

[Arctic Dave]

10. I thought about it but I need all the deductions I can get.

[proud2BlibKansan]

23. They don't really amount to all that much as the balance gets lower

I was surprised to see us lose the deduction and still be paying a mortgage. Plus our kids aged out so we got hit bad with taxes. It made more sense to not have a mortgage. There's a great freedom that goes with it.

[Codeine]

26. Near the end you're paying so much more principle than interest

your write-off won't really amount to much.

[LiberalFighter]

34. It is at the point that the interest payments and other deductions become less than standard

that it is not worth the effort. I'm 7 years away from when my mortgage would be paid off if I had not been paying a few extra dollars each month for the principal. But because of that at the end of 2012 it will be paid off. I was just trying to figure out if it would be worth it to me to pay it all off this year. I did schedule to make a one time 2,500 payment to ease into it.

[ProdigalJunkMail]

46. bad tax strategy...

you are only getting deductions on the interest. if you're paying 6% interest on a loan (say $11,000 in interest) you are only taking a deduction on the allowable part of the $11,000 (in most cases all of it) and at the highest tax bracket you are getting about $3500 back in your tax savings.

So, you are spending $11,000 to save $3,500...if you can afford to do it and you don't have a kick-ass mortgage rate, it makes more sense financially to pay it off.

sP

[pacalo]

We did about 4 years ago & it feels good.

We had $26k left to pay & it was the best thing we've ever done in feeling more secure. It's a good feeling -- do it.

:hi:

:toast:

[Roselma]

15. We paid ours off 5 years early. We were in that situation where,

near the end of a long loan, we were primarily paying against principal anyway and weren't getting much of an interest deduction on our taxes. It made sense to pay the thing off, because we weren't earning much on regular savings. It was amazing how quickly we were able to amass savings/investments after we paid off the house. Too bad, we did lose some money when the markets crashed in September 2008, but we were still ahead of the game having paid off the house.

[Xipe Totec]

17. Well, we're definitely on our way

Paid off the second mortgage.

Refinanced from a 30 year to a 15 year mortgage on the first mortgage 5 years ago, and kept our payments the same.

Paying off 2 payments ahead of schedule every year.

I think we owe 7 years or less on our mortgage.

If I get a fat bonus at the end of the year, guess where the money is going...

[struggle4progress]

19. Double-check your loan agreement carefully. For a while, some banks

were charging penalties for early pay-offs. I kid you not

[proud2BlibKansan]

24. Many car loans charge a penalty for an early payoff

And it sure makes no sense to me.

[Gaedel]

42. Usually

The penalty for early payoff only applies in the early years of the mortgage so that you aren't "mortgage flipping".

If you are in the last ten years of a thirty year mortgage, they aren't too stinky about early payoff.

[H2O Man]

22. Yes.

I did.

[FreakinDJ]

25. Been paying and extra $300 per month for years now

[Sherman A1]

28. Every case is different, but sounds good to me if you can do so

I am paying a bit extra each month, mostly just to send them a round number. When our cars pay off, I will probably increase the mortgage payment. We are on the backside of a 15 year loan that we re-financed from a 30, so our interest payment is too low to do us any good at tax time (which sucks). Just not in a position to pay it off right now, but heading towards that goal as we can.

I think your move makes sense, I doubt you will have any prepayment penalty with which to deal, but you always want to check everything before taking action. Every loan is different.

[redirish28]

29. My wife saw your thread. She remember years ago that her grandfather helped her mother

pay off her mortgage early. Bank hated them for doing it. She remembers the bank gave her mom so much trouble getting loans because each time they would pay them off early and the bank could make "enough money". on them. Than when they mortgage the house to help her uncle start a store and he fell behind on the payments the bank took GREAT pleasure torturing the family (mentally).



My wife suggest you also read your loan again. Because at one point when her mom had a loan and she pay extra on it they wouldn't credit the next loan payment due. they held the money so that when the loan was ending than they would apply the extra payments.

[L0oniX]

30. Paid off $56,000 3 years ago. So nice to not have those fucking payments anymore.

[Lefta Dissenter]

31. Many mortgages

don't have prepayment penalties at all, and those that do are usually limited to three years or so (they want to recover some costs if you pay off within the first three years of getting that mortgage - and make you feel stuck in what you have). Yes, check your mortgage document to see where you stand.

Consider talking with a title company about doing a closing for you. It might cost a little bit (depending on where you live), but then they're able to wire the money to the lender and make sure the mortgage satisfaction is properly recorded right away. They also can do a title search (might cost $75 or so), to ensure that there are no surprises for you - that the mortgage you are paying off is the only remaining lien on your property. Even if you don't have them write a title policy, a search gives you a heads-up if there is any clean-up that needs to be done on documents that might have been recorded years ago.

Good luck, and congratulations! I wish I could pay mine off!!! :toast:

[proud2BlibKansan]

32. That's good advice. We ran all of our paperwork through an attorney

just to make sure it was all on the up and up.

[northernlights]

36. I paid off my 1st home -- a little condo -- in 10 years

It too some sacrifice at the time, but so worth it. I sold it in 2003 and bought my current home cash. Not having to pay a mortgage is really, really freeing. Especially in uncertain times...I've been out of work a lot in the last 10 years, but at least my home is mine and half its value is homesteaded. Another 3 years and another 20% drop in home values and it will be homesteaded for 100% of its value, or close to it.

Just take that money you've been putting into the mortgage, re-build your savings, and then invest it into things that will help you save more money. If I could, I'd buy a windmill and get off the grid. (I'm in a better wind than solar area...although I'd follow up with solar and maybe stay on the grid and sell the summer excess back to the electric company. Than switch my home to electric everything).

[pnwmom]

37. Great idea, if you can afford it. You'll be effectively making 6%

on your investment, far more than the money is earning now.

[TheWebHead]

38. I paid about 60% of it

basically when your itemized deductions become equal to the standard, then yeah it becomes much more appealing when you get little interest. Last year having money in the stock market was a good bet, but the easy money on that front has been made, so I started selling off stock to pay down my mortgage. Everyone who assumed a higher return in equities has been humbled the past decade, so paying down debt makes some sense.

[WinkyDink]

40. Yes.

[femmocrat]

43. Yes. It was wonderful to no longer have a mortgage payment.

We had refinanced in order to pay if off earlier. I don't remember the details. It was several years ago.

[DesertFlower]

44. thanks to all of you for your helpful answers.

[Ernesto]

45. Great question DF

I'm in same boat... Good info!