September Mortgage update: One year since refinance

Last month (August):

Balance: $117,494.67
Years left: 10.25
P = $743.63, I =$470.77, Escrow = 591.95

This month (September):

Balance: $116,051.70
Years left: 10.08333333
P = $749.32, I =$465.08, Escrow = 591.95

One months savings from this month’s prepayment:  ~$2.75.

We refinanced from one year into a 30 year loan at 5.5% (down from 3 years into a 30 year loan at 6.5% the previous year) to a 20 year loan at 4.75% exactly one year ago.  At that point there was $187,923 remaining from our original balance (today, 116,051.70).

In the past 12 months, we have paid $71,871 to the mortgage company.  $63,828 of that was extra pre-payment.  We have cut almost 10 years off our mortgage with these prepayments.  This cut results in a savings on interest of around $66K over the life of the loan.

The bulk of that prepayment was in two lump sums at the beginning of the period– the first was savings we had made over the previous 4 years for a specific purpose, but no longer needed.  The second was from consolidating and closing out some savings accounts and other financial vehicles.

We will not be able to make that size prepayment again.  Also, our big lumps from consulting and unexpectedly high tax refunds are unlikely to hit us this year as we have nothing in the works for consulting and our taxes should be pretty straight-forward this year.  Our expenses are also going up this year– no raises, private school instead of (tax-deductible) preschool, much more expensive benefits packages (less benefit at twice the cost!)

If we decided to pre-pay the mortgage instead of funding a 457 or saving up for infertility treatment, the most we could expect to prepay would be around $19K.  And that is unlikely.  Additionally, since we’re pretty well into the loan, if we paid off the entire loan tomorrow, we would only be saving $30K in interest over the remaining life of the loan (which is a nice amount of money, but prorated over the 19 remaining years of our loan, or even the 10 left from prepayment… not big enough to throw everything at).

So… ready for some boring mortgage updates for the next 10 years or so?  At least it reminds me to talk about spending, saving, and housing.  Maybe we’ll start getting raises again some day.  Hahahaha.  That sure would be nice.  Possibly we’ll end up moving before then.  *Sigh.*

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10 Responses to “September Mortgage update: One year since refinance”

  1. First Gen American Says:

    Wow..that’s certainly an amazing accomplishment. Personally, even if I wasn’t planning on prepaying a lot, I’d still want to prepay just enough so that I’d have less than 10 years left on the loan..you’re so close… a Single Digit amount of years left just seems psychologically so much better than a double digit amount.

    • nicoleandmaggie Says:

      We should have less than 10 years next month. I like round numbers, so we’ll be adding $693.65 every month unless our income changes, and then probably drop down to $193.65 if that happens.

  2. Kellen Says:

    Phew, that’s a lot of prepaying. And I bet we won’t just be hearing boring mortgage updates for the next 10 years, so much is going to change in that time… :)

  3. Linda Says:

    That’s amazing. I’m paying extra on principle every month, too, but it doesn’t seem to be making as much of a difference as you have seen. I guess because I’m not paying as much as you (I pay a little over $300 a month extra) and becuase I haven’t applied larger “windfalls” to the principle.

    I could have applied my entire tax refund to the mortgage, but I didn’t. Instead I spent it on home maintenance projects. I will be getting a bonus sometime this month and could apply it entirely to the mortgage, but I don’t think I’ll do that either. As much as I like it, I’m not convinced I’ll stay in the house until I die and I like having the liquidity of cash. Plus my mortgage interest is my only tax advantage at this point. For now I’m OK with staying on track to pay the mortgage off by 67.

  4. FrauTech Says:

    I know you are bummed about the future, but your amount of pre-payment this year (greater than my pre-tax salary, and in a higher mortgage cost area) is quite impressive so you should be proud of yourselves. Maybe your pay is going to take an inflationary hit these next few years, but honestly most everyone in the country is going through that. but most wouldn’t be able to accomplish what you have!

    • nicoleandmaggie Says:

      That’s not from this-year income (I wish!)– it was savings collected over several years (including pre-kid) that had just been sitting around because we didn’t know what we were doing, among other things.

  5. Well Heeled Blog Says:

    Your prepayments are amazing, seriously. Even though you can’t make those same prepayments this year, can you save just a little bit more over the mortgage payment? I feel that even $20 extra per payment would have a galvanizing psychological effect…


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