The Last Mortgage Payment

Last month (January):
Years left: 0.166666667
P =$1,214.40, I =$10.74, Escrow =$812.79

This month (February):
Years left: 0
P =$1,214.40, I =$5.98, Escrow=$0, Recording fee: $30
Amount of interest saved in this month’s prepayment: $1.20

So, I know that this is ending a month early.  But what happened is my regular mortgage payment is $2027.19, and there was only $1510.75 left on the mortgage (technically $1510.79 because Wells Fargo steals micropennies from us), so it seemed silly to write a bigger check this month and then another check for ~$1100 in March, only to have them send back ~$1600 from the escrow for those two months (along with the ~$500 that’s still in there after they paid our property taxes).  Cashflow and interest argue that in this specific instance, it is better to pay off the loan than to let them have two months of escrow.

[Update:  After we paid off the mortgage in full, we got the bill for the next month’s mortgage.  Then a few days later we got a note saying that we were not allowed to pay the bill (that we had just gotten), instead we would have to pay the mortgage in full because the mortgage balance was less than a payment.  And the in-full payment was due three weeks before the regular mortgage bill!  For a mortgage that had already been paid. Wells Fargo’s departments really need to talk to each other.]

So we got a final payment slip and sent off a final payment check.  Now we wait for our final paperwork to return to us.

So what does this all mean?

Well, the house cost $265,000.  We have paid down that $265,000 including the $53K downpayment in principal in ~10.5 years.  In total, we have paid $364,161.71 on the house, or about 100K in interest more than the house cost initially (but only $20,761 of that since we refinanced 76 months ago– those big interest costs really do come at the beginning of the loan). We paid $114,873.36 extra in pre-payments since our last refinance.  We’ve saved $18,783.83 in interest (not accounting for inflation at all) by prepaying since we refinanced, but I don’t know how much we’ve saved overall since I wasn’t tracking before the refinance.

As we’ve said many times, we will not ever really own the house free and clear.  This year we’re paying about $8K/year in property tax and $2K/year in insurance.  Those numbers will only go up.  We could rent a 2br apartment in town for about that amount and not have to worry about repair bills.  But we won’t.

How does this change our lives?  Well, we now have about $14,573 extra cash flow each year that we had been sending to our mortgage as principal or interest payments.   And I no longer have to write out a mortgage check every month which should save ~12 checks a year meaning we should have to buy new checks less frequently (daycare still takes checks out of the credit union account– I have lessons and incidentals coming out of the Wells Fargo account right now).

It also means that we will need to keep a high enough balance in both Wells Fargo savings and checking to not get charged monthly fees on those two accounts.  Right now we are already doing that because that’s where we’ve been depositing DH’s reimbursement checks and any side payments or gifts that we get.  But I’ll have to be careful going forward.

Also… I guess I won’t be writing these monthly posts anymore, because I have nothing left to track!  It’s the end of an era!  For nostalgia’s sake, here’s the first one from November 2010.  (And here’s an earlier post about refinancing before I started tracking monthly.  And here’s a popular post on why we did some prepayment of the mortgage but didn’t focus everything on prepaying.)  Here’s the mortgage tab if you want to read them all.

Given that I don’t think #2 wants to be pressured into saving up for a down-payment, any thoughts on what should go in this space?  Anything?  Nothing?

46 Responses to “The Last Mortgage Payment”

  1. Practical Parsimony Says:

    Wells Fargo was suing me for more money after I made my last payment! Somehow, they said they had made a mistake in the past and they wanted more money. A judge threw it out. My attorney was appalled they could not get things right after 32-years. They sent me nasty, demanding letters well after the judge had made his decision in my favor. The judge was upset when he heard this from my attorney.


  2. Hypatia Cade Says:

    What do you plan to do with your extra $14k/year?

    • nicoleandmaggie Says:

      Good question. If DH remains employed we’re going to have more than just the extra 14K/year to deal with (a good problem to have!). If he loses his job, then the 14K/year will be filtered into retirement (or living expenses, depending on how you look at it, since money is fungible).

      And, of course, this year our charitable contributions have gone up, mostly as immediate reactions to current events. (We’re not the only ones! The ACLU took in record numbers of donations these past few weeks. Thank goodness they exist.)

  3. Katherine Says:

    Congratulations! I feel like if our mortgage was paid off, we would have so many options. I used to think in terms of moving to another country, but the Orange Jerk just made it infinitely less safe for us abroad, and here too really. And if we left, then there would be less people to make America great again by pushing him out.

    • nicoleandmaggie Says:

      I have been feeling strangely patriotic these past couple weeks. It IS my country, and I am going to FIGHT for it. Hopefully this fighting we’re all doing now will keep the fascism at bay long enough that it remains safe for my family to stay in the country. (Ideally, we’d end up with a world where it was safe for everyone, but we didn’t have that before Trump either. A reminder to keep fighting after he’s gone.)

  4. Mr. Millionaire Says:

    My suggestion is now tracking your retirement savings/goals.

    Welcome to the mortgage free life! Do you think you will go into rental properties?

    • nicoleandmaggie Says:

      Well, we’ve already got more retirement savings than we need given that we don’t plan on retiring in the next 30+. We have careers, not jobs.

      We are definitely NOT going into rental properties. If our house becomes a small enough portion of our portfolio that it would make sense to put more in real estate, we’d use REITs.

      • Leigh Says:

        I would love a post on how having careers, not jobs and not wanting to retire early, while still having healthy retirement savings all ties in together. How does that affect how much you put into retirement accounts vs other accounts each year, etc.?

      • nicoleandmaggie Says:

        TBH it really doesn’t. But I do think it accounts for some of the calm we wouldn’t be feeling if we weren’t in good financial shape right now.

  5. Solitary Diner Says:

    Congratulations! This post scares me a bit, as we are about to start making mortgage payments in the next year, but it’s encouraging to know that they don’t have to be forever.

  6. Leigh Says:

    Congrats! How does it feel? Does it feel anticlimactic? That’s the impression I get from your post. Do you have any new financial goals? I plan to increase my charitable giving when I find an income again since I’m done paying my mortgage.

    We used some of our DAF to donate to the ACLU yesterday which felt great!

    • nicoleandmaggie Says:

      Yeah, pretty anti-climactic. I mean, 14K isn’t nothing, but we’re still paying >$800/mo for property taxes and insurance and that keeps going up every year. (Plus there’s the fact we had enough savings to pay it off a while back. I think the actual turning point was when we could do that so it was no longer a risk, you know?)

      Not really any new financial goals. We had been planning on putting money in the stock market every time we got 10K over 31K in savings, but now we’re not.

      I assume the stock market is crashing today… once leechblock lets me on cnn I’ll have to check on that. I will be extremely surprised if it isn’t, but the problem is I can’t take advantage of a dip like this unless I know how long it will last. And it may last a long long time if Trump continues to do things that are bad for business.

      • Leigh Says:

        That does make sense to have been more of the turning point :) It is fascinating to me how different property taxes are in different places.

        VTI is down just over 1% for today at the moment.

      • nicoleandmaggie Says:

        How low will it go? My plump savings account is willing to find out…

        My friend was just telling me on Friday she was thinking about doing some gains harvesting, but now it’s probably too late for her!

        I hope we don’t get Fascist enough that they’ll be able to seize my assets. Maybe I should start putting excess money in foreign currency…

        Or maybe it’s time to start that donor advised fund.

      • Leigh Says:

        I’ve always kept half of my stock allocation in international stocks which helps me sleep better when crazy things happen in the US. I am also really tempted to leave the US. My husband wants to wait things out for a while though before making “rash decisions”.

      • chacha1 Says:

        CNN has three indexes down, but not by catastrophic amounts. Of course, the Dow is so overvalued that it could lose an awful lot and not really affect most investors unless they have a Dow-pinned fund (which would be stupid). It’s only 30 stocks. Unfortunately, many if not most people seem to mistake the stock market for “the economy.”

        I rebalanced the week of Jan 16. Moved 20% out of stock funds and into bond funds, and put 10% in a new category that Schwab offers called “capital preservation.” I’m now at 40% in bonds, which most advisors would say is too conservative at my age. And at 51 it might be said that I have time to recover from another major market downturn, but I don’t really feel like I do.

      • nicoleandmaggie Says:

        Nasdaq looks like it is taking the brunt, which makes sense.

      • gasstationwithoutpumps Says:

        @Leigh, Property taxes in California are particularly weird, because they vary by when the property was bought more than by the value or location (you know, so that businesses and old money don’t need to pay tax). My tax bill on a house now worth about $910k is only about $4k, because I bought it 30 years ago. I suspect my neighbors, with a cheaper house, have 3 times the property tax, and some of the other houses on the street, which were inherited rather than sold, have half the property tax.

  7. Revanche @ A Gai Shan Life Says:

    Huh, how weird is it to have nothing left to track! I feel like I always have some kind of thing I’m either saving for or paying down in some way.

    It feels like there ought to be something money-related that can go here, but I’m drawing a blank as to what. Monday mornings with colds shouldn’t be allowed.

    • nicoleandmaggie Says:

      It is kind of weird to not have anything left to track. Also not really knowing what to do with more money because we’re maxing out retirement. We were in this situation back in grad school (because we had no retirement room, not for any good reason) and we ended up using some of our savings for a down payment, the rest is still our secondary stockmarket emergency fund.

      But it’s not like we could just give all the excess away either– we don’t have anywhere near enough to buy a house in the place we might have to move if DH loses his job. So if we don’t stay here, there’s that.

  8. jane Says:

    Could you maybe do a positive posting about the fight against white nationalism and the upholding of the American Constitution? Assuming there are positive developments. Please stay strong and positive. I am many times, but other times I am weak & scared, and I remind myself that is normal too.

    • nicoleandmaggie Says:

      We have a post scheduled for next week.

      We’re pretty busy doing activism (well, I’m busy doing activism, #2 is at her FIL’s memorial right now), so there hasn’t been time for writing posts.

      If you’d like more stuff, we strongly recommend wandering scientist’s blog and twitter feed. She’s amazing.

      • jane Says:

        Thank you and much sympathy for #2’s FIL’s entire family. I am reading wandering. AND, THANK YOU for all the time you make in your busy lives to write here. Thank you for activism. Thank you for kindness!

  9. Practical Parsimony Says:

    Homestead exemption laws in AL means I pay no taxes at all. A 100% disability got that for me. Low income and age can be used for a determination, also. . I would prefer to pay taxes and be able to work. Besides, my taxes are only about $400 for the year.

  10. bogart Says:

    Hunh — so, our principal + interest about equal your taxes & insurance. Our taxes & insurance are about half yours. Which is funny, b/c we live (gladly — good services, good QoL) in a noticeably high-tax are for our state (our house is smaller than yours, though). Region matters, I guess.

    • nicoleandmaggie Says:

      I bet we pay less income tax.

      • bogart Says:

        Ours is around 5% and our state is not very progressive (knowing that that’s roughly our marginal rate doesn’t tell you much about our income).

    • Debbie M Says:

      I was going to say some of the same things–I’m surprised that my property taxes and home owner’s insurance are both about half of yours, even in my high-property-tax state (with zero state income tax and 8.25% sales tax). My house is supposedly worth around 260K or 280K now, though I bought it in 1996 for 61.5K. Renting would not be cheaper for me (yet).

      I am also surprised you are still with Wells Fargo. I understand you have no control over who buys your mortgage out from under you, but with that gone, I’d expect you to be in a credit union and/or online bank. Maybe you don’t qualify for any local credit unions? Maybe you need services that they don’t provide? (If the latter, check again; my credit union is providing more and more services).

      • nicoleandmaggie Says:

        We have two banks. Our main one is a local credit union. But we also find it useful to have a national branch bank with lots of atms all over the country.

        I suppose I should note that our house is now valued by the city much higher than 265K and we get re-appraised every single year.

      • Leah Says:

        We also have a WF account (for one of our two accounts) but are working on switching. I agree that a national bank with lots of ATMs is useful, but there are lots of online banks now that refund ATM fees, which is even more convenient.

        I might not be able to change the country or banking policy but can still vote with my dollars. Not that WF cares, but it will feel good to be done with them.

      • Debbie M Says:

        That makes sense, you guys. In case it’s of any interest, I can recommend Alliant Credit Union.

        I joined a while ago to get a high-interest HSA. (The interest for that didn’t go up when their savings account interest went up, but oh well.) Now I put all my regular savings there (except $500 for emergencies at my local credit union). I use my local credit union for bill paying. (I still have my INGDirect/CapitolOne account in case it gets better, but I should probably dump it. I don’t use the subaccounts, my local credit union now has bill pay, and maybe I don’t care if it gets better than Alliant.)

        Soon I will be getting rid of my big-bank rewards credit cards and picking one of the (not as rewarding) cards at Alliant or my local credit union. (When my boyfriend gets a job and I don’t have to care so much about every penny.)

        Alliant’s web site says they have more ATMs than Chase and Bank of America combined and have surcharge rebates. But I haven’t yet tried using that.

        To qualify, I had to contribute at least $20 to a specific charity which I no longer remember, I think something about helping children.

        And #1, I am even more surprised by the tax/insurance difference now that I know that your house is valued about the same as mine (at least after you are done protesting). Yikes! And may I repeat, yikes!

      • nicoleandmaggie Says:

        No, my house is valued at a lot more… I didn’t give the actual value, but it is a lot more than 265K. Protests don’t work. Valuation has just been going up 10% each year.

      • Debbie M Says:

        Oh, ugh. Right, values go up most every year.

  11. First Gen American Says:

    The next near term unmet savings goal seems to be DC1 and Dc2 college fund. More posts on that would be interesting to me as I also have one about the same age. Although I am about a year behind you on payoff, that is my next savings goal. I guess you can also ponder some more about when to get that next car..or do general posts on spending budgets (not the day to day expenses, But those emergency ones). I remember feeling a little overwhelmed when my TV, washer and water heater broke within months of each other, until I realized they were all old and due to be replaced.

    A lot does get fixed when you have a big emergency fund. You don’t really need to keep such close track of everything.

    I know you are not crazy about travel, which would be my next thing to spend on, but maybe you have an enrichment activity budget. Things like trips to historic places or special summer camps or something of that nature.

    • nicoleandmaggie Says:

      We did fly to see DH’s family over Christmas instead of driving and that was much nicer. 5 hours travel time vs. 13 may not seem like a big difference, but it really is.

      We looked into summer camps for DC1 but decided in the end that zie is still too young. We tend to do historic places when there’s a conference at one so the hotel and my airfare are free. The last time we did that I think was Albuquerque. Other enrichment activities (daycamp) just come out of general funds (and are included the extra we save for summer). DC1 is starting to cost less for summer activities because zie doesn’t have to do all of them all day all week anymore because zie is better at not bothering DH while he is working these days. DC2 will have hir last summer at daycare this year and we’ll have to figure out something for hir going forward.

  12. First Gen American Says:

    PS I hate Wells Fargo. never again will I get a loan with them. They were terrible to deal with.

    PSS. Just to jump on the sticker shock bad wagon, yikes! My house is over 4000 sq ft with 2 kitchens/apartments and 3.5 baths and its $6k//year and I live in an expensive town in an expensive state. (MA). Your property tax rate is astronomical, but we do pay state income tax here too, so I guess it evens out. Maybe some posts on where you’d move in retirement. I guess if you earn a lot but don’t have a lot of house, a no state income tax place may be a good place to live. I think I generally prefer paying state income tax as there are limits to what low income folks are required to pay. Paying crazy property taxes with a fixed income in retirement is no fun.

  13. SP Says:

    I will not jump on the sticker shock bandwagon for property taxes, but maybe in 20 years I will (thanks California).

    My husband passed along a rumor that trumps tax plan could disallow deducting of state taxes and property taxes. Seems to be a “republican” tax plan and not specifically mentioned by trump or in his plan. This would cost me quite a bit of money. Are the other changes under discussion going to be implemented for 2017, or is 2017 set?

    • nicoleandmaggie Says:

      I think for the most part they can’t change things like tax brackets, but I’m pretty sure they can change some things (like AMT limits in the past, or refund checks etc.)

      I would take a year of disallowing deduction of state and property taxes if it made people in my state who voted for him turn against him. Though it would definitely hurt a lot of people so maybe not such a good idea. My little sacrifice wouldn’t be the only sacrifice.

      • SP Says:

        Yeah, I would take it too (although it would be expensive) to get rid of him if that were a real option. You are right that others would possibly be hurt more, and maybe could not absorb it. Ugh. But this was factored into my rent vs buy calculations and would be annoying to have that changed.

  14. Linda Says:

    I’m behind on reading posts, so a belated congratulations to you! I don’t have any good suggestions for replacement posts that relate to money, exactly. Although I suppose you could use this space to educate us all about economics in some way.

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