I got pre qualified for a home loan!!!!????

[ezbtr]

Holy cow!!! Credit rating was better than I thought! 220K loan for now
I should be 100% debt free(including Yukon) by Feb.
Whew..............

 

[Rickairmedic]

Re: I got pre qualified for a home loan!!!!????

UM 220K is not exactly debt free . I will teach you a little secret though to turn a 30 year note into a 15 year note though . Make one extra house payment a year marked towards principal only and it will knock 15 years off your Mortgage if you can do more than one payement it will of course shorten the length of the loan even more.


Rick

 

[ezbtr]

Re: I got pre qualified for a home loan!!!!????

LOL, I meant debt free except for a house payment.
Yup I already know about the extra house payment a year, is very do able

 

[jkust]

Re: I got pre qualified for a home loan!!!!????

UM 220K is not exactly debt free . I will teach you a little secret though to turn a 30 year note into a 15 year note though . Make one extra house payment a year marked towards principal only and it will knock 15 years off your Mortgage if you can do more than one payement it will of course shorten the length of the loan even more.


Rick

I would be interested in seeing that math. The great thing is this year you can actually buy a house for 220k with the market correction.

 

[kenmyfam]

Re: I got pre qualified for a home loan!!!!????

UM 220K is not exactly debt free . I will teach you a little secret though to turn a 30 year note into a 15 year note though . Make one extra house payment a year marked towards principal only and it will knock 15 years off your Mortgage if you can do more than one payement it will of course shorten the length of the loan even more.


Rick

I hear you. We got our mortgage just under 10 years ago at 25 year amortization. We currently have 8 years and 7 months left. At the rate we are going we will be free and clear in around 5 more years.
We double a payment each year and pay as much as we can at each anniversary. We also pay bi-weekly and that knocks it down in a hurry as well.

 

[kenmyfam]

Re: I got pre qualified for a home loan!!!!????

Holy cow!!! Credit rating was better than I thought! 220K loan for now
I should be 100% debt free(including Yukon) by Feb.
Whew..............

Congratulations. I remember your post a while back when things were not quite so rosy for you !!!
All the best to you buddy.

 

[newbster]

Re: I got pre qualified for a home loan!!!!????

Do you want to be "free and clear" If anyone ever successfully sues you they will own your house. At least with carrying the primary note they can't force you out. And if it's a reasonable rate, you can do other things with the money.

 

[kenmyfam]

Re: I got pre qualified for a home loan!!!!????

Do you want to be "free and clear" If anyone ever successfully sues you they will own your house. At least with carrying the primary note they can't force you out. And if it's a reasonable rate, you can do other things with the money.

Yes I do. If that happened I would hope that my insurance took care of it. Don't want to be mortgaged into retirement.

 

[Rickairmedic]

Re: I got pre qualified for a home loan!!!!????

I would be interested in seeing that math. The great thing is this year you can actually buy a house for 220k with the market correction.

The math is really rather simple the first 10 years of a 30 year note you hardly even touch the pricipal on the note all you pay is interest so by simply paying one extra payment a year you are actually paying down the principal on the note thus lowering ghe number of years left to pay it off. The more you put in the more time comes off the note.


Rick

 

[Fly Rod]

Re: I got pre qualified for a home loan!!!!????

Congratulations!

Check and see if your state has a HomeStead Act. If so, make sure that you get it when you purchase your home. Very cheap to obtain for the protection that you will receive against debtors. Your protection varies from state to state.

In Mass. it cost $35.00 one time fee for $500,000.00 protection from debtors from the day that it is purchased any debt prior to the purchase you are still liable for. Also you are not protected from the IRS, state, city & federal taxes.

My understanding is that Florida has one of the best HomeStead Acts.

 

[jkust]

Re: I got pre qualified for a home loan!!!!????

The math is really rather simple the first 10 years of a 30 year note you hardly even touch the pricipal on the note all you pay is interest so by simply paying one extra payment a year you are actually paying down the principal on the note thus lowering ghe number of years left to pay it off. The more you put in the more time comes off the note.


Rick

Rickairmedic, I pulled up a few of those online calculators and I have 22 years left on the house and the calculator tells me that to pay off the house in 15 years from now on my current 30 year note (instead of refinancing to a 15 year loan at a lower rate but higher payment) I need to more than double my entire principal and interest payment in just principal every month for every payment for 15 years. I thought just paying an extra payment or two would yield better results but was suprised. I attribute this to 15 year rates being so much lower than my current 30 year 5.65% rate. We are seriously considering a refi to a 15 year because we will save almost 200k in interest by doing so (again according to online calculators). I hate the idea of shelling out up to $10,000 in costs.

 

[Tacklewasher]

Re: I got pre qualified for a home loan!!!!????

Okay. A little bit of Excel work here.

Bear in mind these numbers are slightly off from what the on-line calculators give because I'm assuming a simpler interest calculation, not the semi-annual compounding. But the difference is small.

Principal $220,000
Term 30 years
Rate 6%
Payment $1,319.01

Paying 1/12th more per month $1,428.93
New term 24.54 years
This will be slightly better than one extra payment per year. That's just harder to model in excel.

It won't knock it in half (from 30 to 15 years) but it does have an impact.

Which brings me to a pet peeve. Bi-weekly payments. Or rather how the bi-weekly payments are sold by banks.

If I take the original numbers, but make the payments bi-weekly, i get a new term of 24.51. Effectively the same as adding 1/12th to a monthly payment. Which is fine except that this is sold as some great idea and I've seen people talked into it when they don't get paid bi-weekly and I've seen them in a bind over a mtge payment outside of a normal pay period.

Pay what you can, when you can and don't buy into the hype the banks try to sell.

 

[jacknbella]

Re: I got pre qualified for a home loan!!!!????

We just refinanced for 15-yrs at 4.25%. Our monthly payment actually went down $20 and it will save us nearly $80K in interest if we kept the 30-yr note.

Making an extra payment each year can't hurt, but there are even faster ways to pay-off mortgages (in less than 7 years). I would be more than happy to explain in more detail but send me a PM so I can send some files to you.

 

[kenmyfam]

Re: I got pre qualified for a home loan!!!!????

We have not really done a lot of the math other than seeing our final payment getting much closer !!!!!

 

[scipper77]

Re: I got pre qualified for a home loan!!!!????

Ive done the math, and I decided it's better to invest that extra money and just pay a little extra on the mortgage each month (I pay $50 extra each month). The way I see it you can't get the money back once you put it into the mortgage if you lost your jog or something like that. Imagine putting every spare penny into the mortgage to get ahead and then running into some financial woes and getting foreclosed on even though you are 2 years ahead on your mortgage. Plus after the motgage is paid off your investments will continue to make money.

On the flip side the money put into the mortgage early on has a guaranteed return that is pretty good based on the interest you save from bringing down the principal. It's just like anything else, Diversify where your money goes.

 

[kenmyfam]

Re: I got pre qualified for a home loan!!!!????

Dumping the higher interest loans should be taken care of before the additional payments on the mortgage in my opinion.