The Last Mortgage Payment

Last month (January):
Balance:$1,510.75
Years left: 0.166666667
P =$1,214.40, I =$10.74, Escrow =$812.79

This month (February):
Balance:$0
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?