Comments on: Quick Tip: Shave 7 Years Off Your Mortgage!

By: Paise Hainee

Paise Hainee — Mon, 30 Jul 2007 20:42:31 +0000

I would agree that most people just simply do not have the discipline to make the regular payments themselves. If everything is set up for them, they will at least receive the benefit. Any suggestions such as this are always helpful, thanks.

By: christianfinance

christianfinance — Wed, 18 Jul 2007 01:58:09 +0000

Sure, you can set up the plan yourself by using online bill pay through your bank, and I don’t have a problem with that. But some people are just not diligent enough to do it. Also, you don’t know how your bank is going to treat those different payments.

As far as investing versus paying down your mortgage, I think it’s an easy one. Paying down your mortgage is a guaranteed return of 5-6% or whatever your interest rate is. Investing is not guaranteed at all. Sure you can get 10-15%, but you can also lose money. You also have to factor in taxes. After you adjust for risk and taxes, the potential extra 4% you could get investing is really a moot point.

By: Mr. Bee

Mr. Bee — Tue, 17 Jul 2007 23:28:42 +0000

I agree with Lazy Man, never let your bank charge you for this service. You can do it yourself. Make the extra payment per month to the amount you are comfortable with. If it meant an extra payment of $150, then let be it. If you can afford to double your payment, and do it as long as it doesn’t impact your emergency fund.

Regarding Lazy man second point, it is a complex topic. I personally have paid off my mortgage. I will have to admit that it is more emotional than sound financial decision. Granted though, my house value was around $150,000, and I have more invested in taxable accounts than my house (excluding money in retirement account).

By: Lazy Man and Money

Lazy Man and Money — Tue, 17 Jul 2007 17:31:02 +0000

The “biweekly mortgage plan” has been around for years – I’m not sure if David Bach invented it. However, NEVER, NEVER, NEVER let your bank charge you for this service. Just set up an online banking account (free from most banks, if yours isn’t – get a new bank!) and choose to send them a check on the same intervals. When the mortgage company receives your check they will apply it to your balance and you’ll save the same amount. Another way to do this is to make an addition small payment, say $150 a month, on the same date each month (again something that can be automated by your bank through online banking). At the end of the year, you’ll end up making the extra payment and not have to worry about shifting money out quite so often.

Also, you might want to consider not paying off your home early and investing the money instead. Many people would rather make 10% on their money than save 5-6% on their mortgage. It’s a complex topic and there’s a lot written about investing vs. paying off your mortgage.