I am on a 30yr. house loan so my house will no t be paid off until I am 65yrs.?

Question

I would like to get my house paid off by the time I am 55yrs. I am presently 37 yrs old. What should I do to accomplish this goal?

Answer 1

While paying off a mortgage by age 55 is a good goal, it might not be in your best interest to do so. Typically the interest rate you're paying for such a long term loan is relatively small. If the interest you pay on the loan becomes less than the amount of interest you can earn through investment, it is more advantageous for you to invest while paying the loan to it's expiry.
If you insist on clearing your loan by age 55, you will need to increase your monthly payments.Before doing so check that you won't be liable for an early payment penalty.

Answer 2

Pay more now. For instance, if you double the premium part of the payment, not the whole payment, just the premium part (a typical 30 year loan the premium might be 30 or 40 dollars a month at the beginning), for the first 5 years the loan pays off in 17 years rather than 30. Every dollar you pay early in a loan cuts off a lot on the back end. So putting an extra $100 on the payment will have a dramatic effect on the backend.

Answer 3

Unless you are planning on retirement at 55 , why?
The last 10 years of most loans have little interest in them so you
will not save much money. The loans are all front loaded.
If you intend to retire and stay in the house, the best way is to re-finance down to a 20 or 15 year note so that you can still take the front end deductions each year until you can pay it off.
Else win the lottery, get a better job, inherit, etc.

Answer 4

you are probably allowed to make accelarated payments on your mortgage. to figure out what your new monthly payment is to pay off the mortgage by age 55, you could ask your bank, or do an excel spreadsheet. i did one for you that you can use as an estimate.

if you currently owe $100,000 and your mortgage has a 7% annual rate and you want to pay it off in equal monthly payments over the next 18 years (age 37 to 55), the amount is $815.50 per month.

the spreadsheet isn't too hard to do, but it's too difficult to explain here. if you don't know how, i'm sure someone can help you. use my example as a "test" to make sure you get it done correctly.

also, in doing your planning, remember that this is just the mortgage payment and does not include other items such as property tax and insurance that may be in your current payment.

Answer 5

BRAVO for you for not wanting to have a house payment forever!!

I would use this calculator to find out what you should pay each month to accomplish your goal.
http://ray.met.fsu.edu/~bret/amortize.html

Example: You have 18 years (216 months) to accomplish this goal. Enter your data into the calculator, change the "number of regular payments" to 216 and it will give you what you need to pay each month to reach your goal. So if you owe 100,000 at 6.5% you should pay: $786.56 each month (not including taxes and insurance).

Answer 6

figure your payment so your loan will be paid off in 18 years. use calculator and put 216 (18 years) for number of payments.

Answer 7

go to bankrate.com. They have fun little calculators to figure out things like....how much should I apply toward principal each month so my mortgage is paid off by a certain date.....

If you choose (and you should) pay extra on your mortgage.....send a separate check in a separate envelope and write "principal only" in the memo line.....