JakeLeg
10-21-2006, 05:02 AM
when we bought the place in Aug 2004, we had to get 2 mortgages, even though we were borrowing well below what the calculations said we could afford, due to lack of a credit rating.
Borrowed about 65k in a traditional 30-year mortgage at 6.75%, and had to make up the difference in a second mortgage. This was 15,000 at about 12%. It was a 15 year baloon mortgage. This means that our monthly payment of about $130 included only about $5 toward principal, with about $125 going toward interest. At the end of 15 years, we would have paid about $22,500 in interest, plus about $1000 in principal. The remaining 14,000 in principal would have been paid off in a lump sum (balloon) payment, or had to be refinanced. Not liking that prospect, we decided to pay off that mortgage very quickly.
Like i said, we bought a place well within our means. On average we were paying an additional $500 a month toward the principal, with additional money from work bonuses, tax refunds, etc, going in also.
We paid off that mortgage this month just 2 years, 2 months into it.
Like I said, if we had paid it on schedule, we would have paid the principal, $15,000 plus 15 years of interest at about $125 a month, or about $22,500, totalling about $37,500.
We ended up paying 26 months of interest, or about $3250, plus the $15,000 principal, or about $18,250.
This saved us about $19,250. Which is well more than we could have taken as a tax deduction from the mortgage interest. Let me tell you this: it's fun screwing the finance company out of almost $20,000 that those bloodsuckers thought they were gonna get from us when they lent us the money.
It goes to follow my philosophy that paying off a mortgage is preferred over taking the deduction on the interest.
Borrowed about 65k in a traditional 30-year mortgage at 6.75%, and had to make up the difference in a second mortgage. This was 15,000 at about 12%. It was a 15 year baloon mortgage. This means that our monthly payment of about $130 included only about $5 toward principal, with about $125 going toward interest. At the end of 15 years, we would have paid about $22,500 in interest, plus about $1000 in principal. The remaining 14,000 in principal would have been paid off in a lump sum (balloon) payment, or had to be refinanced. Not liking that prospect, we decided to pay off that mortgage very quickly.
Like i said, we bought a place well within our means. On average we were paying an additional $500 a month toward the principal, with additional money from work bonuses, tax refunds, etc, going in also.
We paid off that mortgage this month just 2 years, 2 months into it.
Like I said, if we had paid it on schedule, we would have paid the principal, $15,000 plus 15 years of interest at about $125 a month, or about $22,500, totalling about $37,500.
We ended up paying 26 months of interest, or about $3250, plus the $15,000 principal, or about $18,250.
This saved us about $19,250. Which is well more than we could have taken as a tax deduction from the mortgage interest. Let me tell you this: it's fun screwing the finance company out of almost $20,000 that those bloodsuckers thought they were gonna get from us when they lent us the money.
It goes to follow my philosophy that paying off a mortgage is preferred over taking the deduction on the interest.