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Paying More Than Mortgage

Savvy Community: Paying More Toward Your Mortgage?

This question was shared by reader Brisas in the Ask Savvy group.

We are buying our first house and are really excited to have a place to call home. My husband and I started discussing reworking our budget to account for the mortgage and everything else that is related to the house. We started wondering if we should actually pay more than our monthly payment or perhaps just save that money or invest it. We are only planning on staying in the home for five years. Just wondering do you pay extra each month towards your mortgage and how much?

Have a career or finance question of your own? Ask it in our Ask Savvy group.


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bluebellknoll bluebellknoll 5 years
Since you are only planning on staying in the house for 5 years, I think corbinia's advice is great for you.I have been in my house for approx 16 years and have always paid a little extra each month towards the principle (like between $50-$300 per payment). At the rate I'm going, I'll have the house paid off in 5 more years. Plus, my payments are outrageously low. My advice is if you find a house you want to settle down in, definitely pay a little extra every month. It will pay off in the long run.
bluebellknoll bluebellknoll 5 years
Since you are only planning on staying in the house for 5 years, I think corbinia's advice is great for you. I have been in my house for approx 16 years and have always paid a little extra each month towards the principle (like between $50-$300 per payment). At the rate I'm going, I'll have the house paid off in 5 more years. Plus, my payments are outrageously low. My advice is if you find a house you want to settle down in, definitely pay a little extra every month. It will pay off in the long run.
corbinia corbinia 5 years
Paying down your mortgage is a great idea, but I think it should be done after you have a comfortable safety net of savings accounts. Once you put the money to principle, you don't have as much access to that money. And unplanned emergencies can cause you to spiral into debt if you are not careful. What I'd recommend is to first make sure you have an emergency savings of 3 to 8 months (this is up to you- depending on job stability, repairs, etc) in an account that you have easy access to. This could be used to include household repairs as well as supporting yourself if your income is reduced. If you have an older house I'd recommend saving to cover household repairs somewhere between $5K to $10K-- depending on how old AC units, water heaters, roofing, etc are-- you should have that history to guesstimate when things might start needing repairs. My sister had her AC go out, a toilet leak, and some other household repairs. I think that ran her around $5000-6000. It's much better to have that money on hand than to have spent that money to pay down your mortgage. After those funds are set up, you could start prepaying your loans and building equity in your home.
corbinia corbinia 5 years
Paying down your mortgage is a great idea, but I think it should be done after you have a comfortable safety net of savings accounts. Once you put the money to principle, you don't have as much access to that money. And unplanned emergencies can cause you to spiral into debt if you are not careful.What I'd recommend is to first make sure you have an emergency savings of 3 to 8 months (this is up to you- depending on job stability, repairs, etc) in an account that you have easy access to. This could be used to include household repairs as well as supporting yourself if your income is reduced. If you have an older house I'd recommend saving to cover household repairs somewhere between $5K to $10K-- depending on how old AC units, water heaters, roofing, etc are-- you should have that history to guesstimate when things might start needing repairs. My sister had her AC go out, a toilet leak, and some other household repairs. I think that ran her around $5000-6000. It's much better to have that money on hand than to have spent that money to pay down your mortgage. After those funds are set up, you could start prepaying your loans and building equity in your home.
skigurl skigurl 5 years
a year ago I was in your position. These are my thoughts:-I don't think you should overexert yourself or your budget right now by paying more than you need to. When you move in, there are always things that need to be fixed, upgraded, bought etc. and new bills, and money just flies out of your pocket. So I would say set a mortgage payment you are comfortable with without overexerting yourself off the bat.-A few months in once your budget is pretty set and you know all your bill payments and have a plan for home improvements and furniture etc. etc. etc. (all the fun stuff), then you can think about extra mortgage payments.-There are a couple ways to do it: some banks will let you "double up" on a mortgage payment every year. That means if your mortgage payment is 1500$ per month you can put an additional 1500$ down one time through the year and it goes right down on principle. The second option is to, once you are settled and know you have the money every month (or say once you get a promotion and have extra cash or once you pay off your car etc.) you can increase your payments. Like you can go to the bank and say you want to increase your payment by 10% so you will pay an extra $150 a month to principle. Then you can go back later and say you want to do that again, and it will recalculate a percentage based on your new payment. -The second option is more aggressive, though I have a friend who plans to pay off his mortgage in 10 years doing that (yes before he's 40, whoa - but he's also planning on living in his small house until then). I plan to do the first option and double up when we can. We also only plan to be in our house for about 5 years, but any money put down on the principle is just coming back into our pockets and will help us when we want to upgrade in 5 years.Hope this helped!
skigurl skigurl 5 years
a year ago I was in your position. These are my thoughts: -I don't think you should overexert yourself or your budget right now by paying more than you need to. When you move in, there are always things that need to be fixed, upgraded, bought etc. and new bills, and money just flies out of your pocket. So I would say set a mortgage payment you are comfortable with without overexerting yourself off the bat. -A few months in once your budget is pretty set and you know all your bill payments and have a plan for home improvements and furniture etc. etc. etc. (all the fun stuff), then you can think about extra mortgage payments. -There are a couple ways to do it: some banks will let you "double up" on a mortgage payment every year. That means if your mortgage payment is 1500$ per month you can put an additional 1500$ down one time through the year and it goes right down on principle. The second option is to, once you are settled and know you have the money every month (or say once you get a promotion and have extra cash or once you pay off your car etc.) you can increase your payments. Like you can go to the bank and say you want to increase your payment by 10% so you will pay an extra $150 a month to principle. Then you can go back later and say you want to do that again, and it will recalculate a percentage based on your new payment. -The second option is more aggressive, though I have a friend who plans to pay off his mortgage in 10 years doing that (yes before he's 40, whoa - but he's also planning on living in his small house until then). I plan to do the first option and double up when we can. We also only plan to be in our house for about 5 years, but any money put down on the principle is just coming back into our pockets and will help us when we want to upgrade in 5 years. Hope this helped!
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