Friday, September 28, 2012

Aggressive Mortgage Plan Payment 1

We recently refinanced our house, from a 30-year fixed APR of 5.625% that had about 25 years left, down to a 15-year fixed APR of 3.75%.  That closed on August 17th and it took them another week to get the old loan closed out and this one active.  So, the first payment was/is due on October 1st.

Well, I just made the first payment and included an additional $1,000 towards principle.  See, we have a plan to cut this mortgage down, paying it off in exactly 100 payments.  Why 100?  Well, it's not that scientific.  I was using a mortgage amortization schedule that included a column for extra principle payments. I was going through that, adding the standard "extra" we cay pay:

  • twice yearly half mortgage payments when I get paid three times in a month
  • once a year we throw some of our tax refund at it
  • once a year I get a longevity bonus that will go toward it
  • once a year I put some from my part time work that I've saved throughout the year
  • additional principle from rounding up (from $1,056 to $1,100)
  • my wife's part-time job 
  • some regular contribution from my part-time job

Once I got done with that, I noticed that a large (~$5,000) payment on month 100 would end it.  So, that was that!  Month 1 was easy.  It was, more-or-less, the refund of our escrow account from our old loan, since we pre-paid that same balance into our new loan.  [I don't know why they did that, rationally, but it's irrelevant at this point.]  

My plan is to keep the extra principle in our savings account and build it up throughout the month, then when it's time to make the payment, simply move that extra principle into the checking account.  

The thing I can't get out of my head now is: "100 months of mortgage payments on the wall....100 months of mortgage payments on the wall..."  It will be a long journey, but hey, there's only 99 left!  And then, we'll be completely DEBT FREE.

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