Tuesday, April 9, 2013

Paying Off That Mortgage

This post, on The Dollar Stretcher (excellent website for thrifty types), does a better job than I have in explaining why I think it's pretty much a good idea for almost everyone to pay off their mortgages.


The tax write off is not enough motivation since you only get 25-30% of your interest money back.  In the long run, paying off early, even just over paying a bit each month, can save you more than 25-30% of that interest.  

And think about what you could do with that money WITHOUT a mortgage payment.   Save it.  Pay off other debt.  Improve you health insurance.  Travel.  Buy better food.  Quit your job in a huff.   Avoid losing your house if you lose your job.   Less debt means you are less of a wage-slave.

So, that sort of logic is why I'm saving saving saving and hope to buy my next home without a mortgage.  If I pay cash, I'll save a TON on interest.  I already did that by paying cash for the car.  My interest cost was exactly $0.00.   Nice.

According to an online interest calculator, if I'd gotten a 4 year loan at 5% interest I would have paid nearly $2000.00 in interest.  Instead, that money is in the bank.  I also paid no loan fees or costs. 

I should look back at my old mortgage papers and see what my closing costs were.  I know the interest, if I paid the loan off in the 30 years with no over payments or pre-payments, would have been pretty much 2 times the cost of the house...yikes. 

End of today's rant.

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