Seniors: would you like to pass some valuable info on to your kids?

Question

For those who still have mortages, as you know after dancing I went into selling, and then 18 years in Real Estate. My advise I would always give to my clients,was to find out on what date the Banks calculated your Interest, on your outstanding mortage amount. It may work differently in The States.Say they calculate your interest on the very last day of the month, and:-

Assuming, you have a mortgate of $40,000.00 (Forty Thousand Dollars) and you pay $2000 a month on your mortgage (I don't know the % of your Mortgage rates in the States). They will calculate your interest on $40,000.00 (Forty Thousand Dollars). BUT, if you can pay that $2000, on the day BEFORE they calculate your Interested Rates, they will then only be calculating interesT on $38,000.00 (Thirty Eight thousand). If you sit down, and calulate this, over you entire Mortgage period, which is usually 20 or 25 years, you will be amazed at how many thousands you have saved at the end of the term. You will have calculate.

You will have to do your own calculations, or tell you Children, who have a Mortgage to take some time to do the calculations.

Answer 1

That is very good advise. Paying your mortgage every month, before interest is calculated must save a lot of money at the end of your mortgage period. I will pass this on to my sons who both have to pay their mortgages.

Answer 2

Good advice on any long standing payment....any time you have extra money, pay it with your mortgage and you reduce the principle...over time, this can save many thousands of dollars. In my case, I am at a quandry...I am 66, can elect to pay interest only for my house and leave the outstanding balance alone...it is very tempting, for in reality, my kids need nothing, and the extra money that would go into principle would be extra cash for a rainy day..there always seems to be rainy days, don't there? But if you are young, I agree with you...pay as much as you can on every payment. Good luck and peace, Phil

Answer 3

what i did when we were paying for our house was this :
payment was supposed to be $546/mo. i paid $600 every 4 weeks whether the payment was due yet or not. my husband gets paid every 2 weeks, so every other payday, i made a payment. some months it fell that he had 3 paydays and i still kept to that schedule, sometimes making 2 payments in a month. then when interest rates were WAY down, i went in and did a debt consolidation loan - put the house, truck and another property we had bought to build my kennel on all together. asked them what payments would be and what interest rate would be - did the math - ended up paying less per month than the 3 payments combined - still paid every other payday and had everything paid for in 3 years. interest rate was only 4.5% fixed - quite a deal - wish it was still that low !!

Answer 4

that is a good point, there are several, but most people do not seen to want to use them,
by rounding up your payment, for instance, if your payment is $926.00 and you round it up to $930.00 you won't miss the extra $4.00 but will cut years off from the life of your mortgage.
the first 5 years of a mortgage is almost all interest.

also cutting you payment in half, and paying on the first, and fifteenth, will also boost your principal payment.

and by paying a month in advance, it will do the same thing.

Answer 5

Hey Justme, That is very Good Advice and I will pass it on to my kids as both of them just married and one bought a home and the other is in the process of looking to buy. I don't think it works that way in the US but I will check it out! Thanks!

Answer 6

I want to discuss this with my husband. He beleives in rounding up anyway. Valuable info for the kids.

Answer 7

I never looked at it like that. Will tell my oldest kids who are looking at buying in the next couple of years.

Answer 8

I did, here it is, the mortgage scam is the biggest ripoff since the Ponzi scheme...

Answer 9

Good information. I'll pass that along to my son!