Posted By: Celabookkeeping

Date:July 18, 2019

Paying Off Home Mortgage Sooner Without Fee

Several years ago, a representative for a financial services approached us and showed us that by paying only one-half of our mortgage payment every two weeks plus a small monthly fee, we could cut our mortgage payments as many as seven years. At that time, we still had a little over 20 years of mortgage payments to go. It sounded wonderful and very tempting after all, who wouldn’t want reduce their mortgage payments by 7 years? However, for whatever reasons we did not signing up for it. One of the reasons was because I remember that Microsoft Excel spreadsheet has a template called Loan Amortization where I could find out what my monthly payments on a loan would be, by applying the principal, interest rate and duration of the loan.

Fast forward a few years; due to some changes in our family circumstances, we had to refinance and went back to a fresh 30-year mortgage with the first 5 years of fixed interest. We made that choice in order to lower our monthly payments for that first few years hoping that when things gotten better, we could refinance again with a shorter term. With that Loan Amortization template in mind, I began to play with it using my new loan numbers, and realized that we could do our own schedule to pay off our mortgage if we send in extra payment every month. The beauty of this schedule is that not only you know you will pay off your mortgage faster, you can also decide when exactly you will have it pay off at how soon you can pay it off.

We decided to make a dramatic change and took the fastest route possible to pay off the mortgage. My husband went back to school after he lost his job, but after he graduated, he was offered a position immediately. Although with an additional income, we decided to continue to leave on survival mode as in the past years, while dumping all of that extra income towards our mortgage. Although we had a little hiccup along the way, such as our van went kaput so, we had to replace it. We went for a new van and took another loan on it because our focus was on attacking our mortgage. When the fives years was up and it was time for us to either refinance again or continue with its adjustable interest rate, we made our last payment on our mortgage and became debt free from it. Next, since we still have a loan on our new van, applying the same principal, we paid that off also within a few months. The feeling of being free from debt is unspeakable.

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