Jan mortgage update: and musings on bank packages

Last month (December):

Balance: $111,958.93
Years left: 9.666666667
P = $765.99, I =$448.41, Escrow = 726.93

This month (January):

Balance: $110,629.03
Years left: 9.583333333
P = $771.23, I =$443.17, Escrow = 726.93

One months savings from this month’s prepayment:  ~$2.22. They haven’t figured out that our escrow should be smaller yet.  We looked at the papers again and it says we need at least 1200 something in there and we only have 700 or so because they just paid escrow.  So one of these months…

We will occasionally get notices from our Big Bank (not our credit union) that fees will be going up for checking and/or savings accounts. Currently we have no fees.

Each time this happens, we check around and we find that we’re still exempt from fees because we have our mortgage with the Big Bank.

What about when we no longer have a mortgage… will we then pay fees?  Or maybe we’ll have to do one of those sleight of hand things with direct deposit or something that’s a PITA, especially when the keep changing what you need to do to not pay those fees.

Makes one think that maybe keeping the mortgage is worth it.

Except… the monthly cost of the mortgage is currently $443.17 in interest.  If we stopped doing pre-payments, our last full payment would be $7.11 in interest (followed by a $2.43 interest cost on a partial payment). The monthly cost of having to pay for the accounts would be more like $5. That seems like a silly reason to keep the mortgage.

Of course, in reality, we’d just close up the Big Bank account rather than pay $5/month on it or deal with constantly changing hassle.  We still have our free credit union account, after all.  It’s obviously not worth $5/month to keep bank account… so it shouldn’t be worth what we’re paying in mortgage interest either.

Bottom line:  free checking is not a good reason to keep a mortgage!  But it’s a nice benefit given you’ve got a mortgage.

10 Responses to “Jan mortgage update: and musings on bank packages”

  1. bardiac Says:

    Psst, it’s actually January now.

    I can’t make the numbers work. Are you showing the extra you put in? (Or does the escrow count for the mortgage and I didn’t realize that?) (I used the December balance due, and subtracted the amount of principal paid in January. Obviously, I’m doing something wrong.)

  2. nicoleandmaggie Says:

    Oops. The numbers and headings should now be correct.

    I haven’t been listing the amount we prepay, just the amount we save from doing the prepayment.

    I like making payments in round numbers, so generally our prepayment is either 2000 – P – I – E or, as has been the case this year, 2500 – P – I – E. When E goes up, the prepayment goes down. When we weren’t putting extra money into DH’s 457 sometimes we’d do an occasional 3000-P-I-E or 5000-P-I-E, but we don’t have that kind of cash on hand anymore.

    The change in the balance includes both P and prepayment. And it looks like the month headings weren’t the only things misupdated… those were February’s numbers assuming the same pre-payment.

  3. Kellen Says:

    Why is direct deposit a PITA? Do you have a different account that the paychecks get deposited to?
    I know my high-interest checking accounts require either ACH or direct deposit to qualify for the high-interest, and the ACH is super easy to do because I have multiple $100 auto deposits to my investment accounts each month.

    • nicoleandmaggie Says:

      Our paychecks go direct deposit to our credit union, which has a higher interest rate. Changing that would be a small PITA. What is a larger PITA is the way they want automated payments flowing to or from Savings/Checking and those rules change from time to time. Hassle. We do not have multiple auto deposits that occur at the bank level, most of that happens prior to getting our take-home pay. The only direct debit we have goes directly from savings to the 529 each month. We don’t spend the same amount in checking each month so having an automated deposit from savings to checking wouldn’t be that helpful, and I might forget to record it in the check-book register which would mess things up. It also seems silly to have $10 going between savings and checking and then back again.

  4. Grace Says:

    I have direct deposits to two different banks (and accounts)–each requires only $500 a month in direct deposits to get the free checking. Are you really getting enough interest from the credit union to make a difference?

    The only real PITA for me is that my employer requires that the same amount come out of each paycheck (I get paid twice a month) which means I have to juggle some of my payments a bit. I handle this by setting up automatic transfers between the banks.

    • nicoleandmaggie Says:

      The CU is about 2x the amount in interest as the Big Bank. Currently that isn’t much, but in the past it has been.

      I do the majority of my banking with just the CU. We only use the big bank when we’re traveling and need ATMs. Eating a few fees or carrying more cash is probably worth not having to deal with split direct deposits or juggling payments or automatic transfers. In 4-9 years or so when the mortgage is paid off. And by then banks may be eager for our business again. Who knows.

      (Also: it currently isn’t *just* direct deposit that’s needed for free checking. It’s direct deposit and something else. That was their latest change.)

  5. Leigh Says:

    I was with Wells Fargo and one of their “packages” a few years ago. The only somewhat good “deal” with it was that I got free checks, which I don’t with my now credit union (though I did with another credit union). Are you sure the cost would only be $5? I remember them trying to charge me $12-15. I also remember having an automatic transfer from checking to savings of $75 on the 2nd of the month and then an automated transfer back to checking on the 5th… That was my way around their stupid “savings transfer policy”.

    Are you allowed to pay your property taxes yourself instead of using your bank’s escrow account? That’s what I’ve decided to do – it seems far less complicated since it’s just for property taxes and doesn’t include insurance for me.

    • nicoleandmaggie Says:

      They seem to change their rules and fees every some number of months. Who knows what they will be in the future. As for now we’re ok because we have a mortgage and at least some number of accounts hooked up together in some kind of program.

      Yes we’re allowed to pay our own insurance + property taxes. Somewhere we have a post talking about why we’re not doing that. Bottom line is it doesn’t save much money and they take on some of the risk for us.

  6. Carvinal of Personal Finance - "Ask the Right Questions" Edition Says:

    […] from Nicole and Maggie: Grumpy Rumblings presents Jan mortgage update: and musings on bank packages, and says, “Is it worth keeping a mortgage to get free hassle-free checking? […]

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