This Mortgage Hack Actually Works! (Here's Why)
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- Опубликовано: 28 мар 2024
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About this episode:
There’s a trending mortgage hack floating around the interwebs claiming to save you hundreds of thousands in interest and shave years off your payoff timeline. In this video, you’ll learn how it works and why it’s ultimately not the strategy I personally used to pay off my mortgage early.
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I paid up all my mortgages in 2yrs while working with a Financial Adviser. I’m 50 and my husband 54 we are both retired with over $3 million in net worth and no debts. We got to realize that the secret to financial freedom is making better investments.
If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.
Home prices will come down eventually, but for now; get your money (as much as you can) out of the housing market and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes.If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.
I will be happy getting assistance and glad to get the help of one, but just how can one spot a reputable one?
Carol Vivian Constable is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
She appears to be well-educated and well-read. I ran a Google search for her name and came across her website; thank you for sharing.
Keep in mind that during the 80’s people were encouraged to save due to the interest rates. Right now there’s very little incentive to save because those who are saving are watching those who are reckless taking it in. I’ve been trying to save for a home and it’s been discouraging to watch prices continue to not budge because there’s people willing to get into a mortgage where they’re paying 40% of their income. It’s insane.
To balance out your real estate holdings, I suggest investing in equities. If you're cautious, even the worst recessions can present fantastic buying opportunities. Additionally, volatility can produce fantastic short-term purchase and sell opportunities. This is not financial advise, but you should buy immediately away because money isn't king right now!
You're right! With the help of an experienced coach, I made some changes in my investments. I started with $321k, and now I have more than $750k by investing in stocks, ETFs, and bonds. I think housing prices won't go down much until there are more houses available.
@@mikegarvey17Mind if I ask you to recommend this particular coach you using their service?
'Gertrude Margaret Quinto' maintains an online presence. Just make a simple search for her name online.
She appears to be well-educated and well-read. I ran a Google search for her name and came across her website; thank you for sharing.
Mortgage rates are currently at an all time high since 2000(24 years) and based on statistics on inflation, we might see that number skyrocket further, a 30-year fixed rate was only 5% this time last year, so do I just keep waiting for a housing crash before buying or redirect my focus to the equity market
The stock market is no different, to maintain profit, you need to have some in-depth knowledge on the market
True, I mostly just buy and hold stocks, but my portfolio has been mostly in the red for quite awhile now. Unfortunately to be able to make good gains, you’ll need to be consistent and restructure your portfolio frequently.
It's often true that people underestimate the importance of financial advisors until they feel the negative effects of emotional decision-making. I remember a few summers ago, after a tough divorce, when I needed a boost for my struggling business. I researched and found a licensed advisor who diligently helped grow my reserves despite inflation. Consequently, my reserves increased from $275k to around $750k.
my partner’s been considering going the same route, could you share more info please on the advisor that guides you.
Thanks a lot for this recommendation. I just looked her up, and I have sent her an email. I hope she gets back to me soon.
The hack I used on top of paying every 2 weeks was to take the amount of 1 monthly payment (in this case $2200) and divide that by 26 (which would come to $85) and add that to my biweekly payment. Over time I added more and more to that extra amount until I was paying $200 every other week by the end. The last $100,000 of my mortgage disappeared in no time.
Great planning!
By no time, you mean a few years right?
Thank you. Good idea.
Got. 30 yr mortgage. Made extra payments as I could. Paid it off in 19hrs 😊
19 hours is pretty impressive
@@collinhalligan9921 😯....🤔....😄..😁😂😂
Whoa less than 1 day?! Teach me your secrets.
So YOURE who robbed the local bank
Lol
Risk free investment rate (money market etc) is 5%+ currently. Put the extra payment amounts into a money market, pay taxes on the interest, collect interest, pay off the mortgage faster. This sort of triage opportunity won’t last forever but if you’re lucky enough to have a 2-3% mortgage you’re in the money
We got a 25 year mortgage. Trying to pay it off in 15, but keeping some things in mind.
1. Emergency fund of 15k+ (no one's health, job, or assets are guaranteed)
2. Employer's match and personal contributions - Tax Savings
3. Charitable giving - healthier mentally, physically and spiritually (p.s. also Tax Savings)
4. Optional: 20% of annual salary available in something growing and accessible (index etf, stocks, mutual funds)
Often banks don't care if you are ahead of schedule: so be safe and God bless.
One thing I don’t agree on Dave with is forgo some employer match to reduce debt. We don’t have that in Australia but I would prioritise it every time. But then I’ve barely ever had consumer debt except one credit card that blew out between jobs when doing my PhD and I had that paid off within a year!
I think you are right. To be fair, the baby steps push us to get out of consumer debt fast. How you smashed out your credit card balance is a great example.
If you had the employer match, you might have delayed your repayment by 3 months, but that would still have been only 15 months.
Foregoing a year of benefit for a lifetime of benefit down the road is probably a great exchange for most if that is what is needed to stay on task.
(Congrats again to those with paid off homes. A little jealous tbh. 😂)
Yeah the Dave Ramsey steps are for those relying on debt and who can't get their spending under control. They were built to be more psychologically helpful than mathematically helpful. Once you do and you've trained yourself to live below your means, there are a lot more financially savvy and maximal plans out there. Check out the Money Guy Show, they are my favorite!
@@drrush3421Dave’s target audience is people who are struggling, which may include people who know the mathematically correct steps but are overwhelmed because of the personal aspects. His baby steps are meant to crest a psychological benefit that can’t come from mathematics alone.
Just paid off our student loan yesterday! Our next goal is the house! We’re going to double our mortgage payment because we have the margin. Should be done in 6 years if we keep it up
As he said, make sure the extra payment goes to the principal only
My bank actually tried to credit me with multiple payments when i sent them additional funds
After several times and repeated calls after each mistake on their part i finally gave up and stacked the money until had enough to pay off the entire amount
Shysters
I thought the government was making college free and paying everybody’s loans off
@@wildtill9 and in fairness if you have the discipline and the appetite, on average investing your excess funds and using that to pay off in a lump sum at the end will get it done faster than just paying down the priciple.
@@Waddywoos360 thank you for your reply
@@Waddywoos360 This increases the risk of losing your home and is basically no different than leveraging your home to gamble at the casino (stock market)
I and my wife own single home family rentals. we have 200,000 U.S left on mortgages. We are now considering the possibility of maintaining 70,000 U.S annual income by selling and investing in stocks and bonds. How does this work out?
Sell and invest option is viable, but crucial to consult a reputed f/a for income projections aligned with your goals.
I agree. . .monicamarystrigle; a renowned figure in manhattan, grew my entire portfoloi by 227percent last year
I'm in charge of fund allocation while they handle the copying trades from master to my account.
There are a good bunch as well as a bad bunch. You gotta do due diligence and use discretion. I work with Monica Mary Strigle sh’s big timer in New York w/ over 600 m worth assets under management
How can one get to interview advisors? And what questions should you ask?
paid cash 11 years ago. do it if you can.
better than the market and we slept like babies.
'' i stand here before you, owing to no man...''
Mortgage hack: mortgage interest is all front loaded, so if you are ever going to make extra payments, it helps a lot more if you pay them earlier in the life of the loan vs. near the end.
Eh, yes and no. It’s just the way an amortization schedule works when you have a fixed rate and fixed payment term. But, the interest you’ll pay beyond ANY given point is truly reflective of the rate you have applied to the remaining outstanding principal balance. So, pay an extra $200 on your first payment of 360 mortgage payments… and you save 359 months of INTEREST charges on that $200. That’s why you chop off so many years by accelerating principal pay down. In short, the longer you owe someone else money the more you’ll end up paying them. Plain and simple. And at around TWENTY percent, this is why so many people get trapped in credit card quicksand
No, you pay the required amount monthly. Then you make an additional payment to the principal. Why would you ever pay that interest first?
This. This. This.
It helps more due to the effect of compound interest of the interest you're not paying on the loan amount that you've paid off. Not because of the front loading.
The amount being discussed is roughly the size of many people's credit card payment, or car payment. Making a different choice either of those two things can literally give you 15 years of your life back from your bank.
So true!
Great info. George!
Everyone with an under 4% mortgage trying to figure out how to extend their mortgage...
No they are figuring out how to pay it off quicker to not pay even 2% extra. No one smart is extending lol
@@dreams2383 I have a 3.3% mortgage and I'm riding it out for the full 30 years, while my portfolio has averaged 15% over that decade. Thank God I didn't rush to pay it off, I'd be worth a third of what I am now.
@@dreams2383 why would I? My portfolio has outperformed my 3.3% mortgage by a huge margin, over the last decade. I'd be so much further from retirement if I'd put all my money into my house...
@@dreams2383 no I'm not. I'm riding out my 30 year mortgage to the very end, while I put my money into something that appreciates more than a house.
@@dreams2383no, if your mortgage is has a low enough interest rate, you can invest that money for even better yields. For example, at less than 4% mortgage that money goes further in most high interest savings account, many have higher than 4% rate. If interest rates drop, then you can put more of that money into your home instead. Or at 2 or 3 percent you may be better off investing in the stock market (although it is a bit riskier)
Instead of doing 1/2 every two weeks, I just pay a full payment every 28 days, which is still 1 extra payment a year. It literally feels no different at all from paying it once a month.
That was a pilot emoji, not a flight attendant...
Thanks for pointing that out 👩✈️
...ok?
Making one additional payment each year in December is not the same as bi-weekly payments. You pay interest on an amortized loan everyday that you are borrowing the principal. With bi-weekly payments you have 2 partial payments through the year directly to the principal balance therefore reducing the interest accrual. If you make one principal payment each year, only in December, you’ve already been charged interest the last 12 months.
Ok an extra payment each january sound better?
What if you just doubled the payment? Seems odd to do biweekly payments when you could just add more to the one payment you already make each month.
@@alleriodrone You can do both. The bi-weekly payment schedule is supposed to be an insidious "set it and forget it" way to pay down your principle faster. It's purely psychological. It's not supposed to be some kind of miracle hack for paying off your mortgage; you still have to pay back every cent that you borrowed.
What baloney. Any extra you can manage is a great idea. Don't feel badly about paying extra whenever it is possible - and Pat yourself on the back for doing so!
@@roseother8306100% this! Anyone doing anything above and beyond regardless of the amount and time should be proud of themselves!
Another great video🙏🏿😊
Fun fact: cauliflower,broccoli, cabbage kale and Brussels sprouts all come from the same species of plant
My mortgage is 780 a month and currently I am sending 2700 dllrs a month and on track to pay it off in 3 more years.
Wow! How long have you been paying it?
Yeah, sorry, I agree with you guys on a lot, but I'm not aggressively paying off a 3% mortgage to miss out on twice (at least) that in stock gains.
they refuse to change their perspective at all. They have great advice to get rid of debt but have horrible money managing/investing principle
It only makes psychological/peace of mind sense for certain low interest debts. There's no way in hell I'm paying off my $80/m 0% student loan early, but I'm investing 20% and paying ~400/m extra on my mortgage for the sense of security of owning outright
5% is a typical "pay extra instead of investing" tipping point and he's assuming 8, so it's not crazy to choose to pay extra in this scenario
@@TH0KHhow did u get 0%
The math doesn't add up. 3% over 30 years adds up to 100s of thousands of dollars. I doubt your investments are surpassing the amount of interest you are paying on your house.
Risk. Where’s the calculation on that. If you lose your job, economy tanks, theirs is the best strategy for real long term wealth.
Good video George
I like some of your content and I disagree with some of it, but one thing I love about your channel is the progress bar you put on during ads.
Thanks GK.
This was a good one! Thank you for sharing 🤑
Yeah. Honestly this is good advice. I would add.. that there's some additional nuances to this. The earlier you are in you loan, the better results you get. If your mid way into your loan. This really doesn't cut that much time off. But.. just use a debt payoff calculator and if the numbers work out to your satisfaction. It's a great method.
Also a nuance... technically in paying off loans. Paying over time generally performs better than saving a bunch and making lump sum payments. Again. Some nuances to this. Depends on how long. What your doing with the saved money. And obviously if the lump sum pays off the loan today. Thats better than paying that amount over time. Etc. What I'm specifically talking about are short term lump sum payments. Like... say you want to put 20k towards the principal this year. And it doesn't pay off the house. You decide to pay once in July. And the rest in December. In the long haul, if you do something like this frequently. You would have a slightly faster payoff and pay less interest if you had just increased your payment by $1667 per month. Because in loan repayment much of the savings in interest happens in earlier payments. So delaying additional payments means you get hit with the interest you would have missed with regular payments. But.. yeah. Sometimes the fastest way isn't the best way for you.
In 2024,don't set new year financial goals without consulting a financial adviser.there expertise ensure a solid plan for success.Building wealth involves developing good habits like regular putting money away in intervals for solid investments.
Thanks for the advice! I'm new to financial planning and wasn't sure where to start.Any tips on finding a reliable financial adviser or resource to guide beginners?
How can I participate in this?I sincerely aspire to establish a secure financial future and am eager to participate.who is the driving force behind your success?.
Marie Ann Treloar
She has been my counselor and coach.
Research her name on gogle and you will find the necessary information and also her web page to make a contact and schedule an appointment with her.
We had a 25 year mortgage. Weekly payments with options to pay extra any time we wanted. We were able to make at least one extra payment every month. We paid it off in 12 years.
Excellent video. This is EXACTLY what we plan on doing when we buy hopefully next year.
I’m on track to having my 30yr mortgage paid off at the 15yr mark. Using large extra payments each month.
Why don't you invest those extra payments? Watch what compound intrest does with it.
I’m glad you mentioned the bit about just figuring for the monthly extra and paying it still monthly accomplishing the same thing. I was wondering the point of paying bi weekly instead of doing that.
Just for some additional context: If Whitney were to put that $190 extra per month into the market every year for 30 years using the same return assumptions George is using, she would have a nest egg of almost $400,000 from that $190/mo alone.
I'd rather save 137k in interest and invest 2200 for 7 years at 10% equaling about 250k. So I would net positive 387k instead of negative 92k from how much interest you pay. 492k in interest minus the 400k investment leaves you still negative at 92k. Food for thought.
@@StevenKolberg1122 Hey I think that's completely fair. It is personal finance, after all!
That scenario works out much better at higher mortgage interest rates (like the 8% that was used) than it does at lower mortgage interest rates where the opportunity costs of market vs mortgage (10% vs 8%) are closer to one another.
Either way, I was just providing some other insight.
Absolutely 💯, we all out here trying our best 🎉
@@StevenKolberg1122 That's not how that works? The total interest paid over 30 years is $492k. But you didn't calculate the total interest paid by paying it off in 23 years, which is $355k, ($492k - $137k saved). $355k in interest paid plus $250k invested = -$105k, which is worse than the -$92k of investing the whole time.
Or put a different way, you can evaulate the situation at 30 years. Both have a paid off house at 30 years. One has $250k invested, and one has $400k invested.
@@StevenKolberg1122 That's not how the math works.
my mortgage does not allow for prepayment unless its the entire balance... if we pay ahead. .they hold that $ in a non interest bearing account to apply to next month... sooo... no paying extra for us... best we can do is put extra into HYSA and accumulate till we can pay it off fully.
It depends on what your goal is in my opinion. IF your goal is to be debt free; you're doing the correct thing; once HYSA no longer pays more than APR on mortgage, stroke a check. IF your goal is to build wealth, dollar cost averaging into indexes (like VOO, SCHG, VTI, etc) on low/no cost platforms (like SoFi, Vanguard, Fidelity, Schwab, etc) is the proper way to go.
I’d recheck on that, our bank kept trying to pull that but there was no prepayment penalty in our mortgage. We had to send 2 checks each month, one marked PRINCIPAL PAYMENT ONLY. If what you are saying is true I’m sorry you were tricked into this situation. My husband was tricked into this at a motorcycle dealership because he when he asked if there was a prepayment penalty. Instead of saying yes they said not as long as you didn’t pay it off before 1 year. Because of course that was the whole year of interest 🤬🤦♀️such an awful way to learn that lesson.
I would refinance to a mortgage that allows pre payment.
@@Joce123 you would trade a 2.30% interest rate for a 7.53% over that? Uh...I'll keep mine and excelerate my payment another way. Thanks
@@ZillasCoop even if you could make prepayment without penalty you'd still be better off putting that money you would of paid into a HYSA and then just paying it off when your HYSA surpasses the balance on the mortage at least as long as the HYSA is above 2.3%
One thing to remember on this point is some companies hold the funds until the completed payment is received if the loan is set up on monthly payments. Weird I know... most mortgages have to be set up with biweekly payments when the loan is created, in addition some do not let you make the biweekly. You can get this by just dropping an extra payment on each year. Loving the videos.
Correct.
Cooked and mashed cauliflower makes a pretty good substitute for mashed potatoes. Just saying...
I'm doing this with my car loan; it's at 6.7%. Leaving my mortgage alone, which is at 3%. Returns are greater elsewhere
Your first mistake was taking out a car loan...
I agree. Pay that car off instead.
Uncut gems reference epic
The therape plug blew my mind
Why would anyone pay off a 3% mortgage if they can get put the money to work at 12%pa in his pal DR's "growth stock mutual funds" ??
I ❤ how funny you are between giving us valuable advice! Ty
How do you make sure it’s applied to the principal balance?
2.75% interest mortgage rate here. No way I am paying a cent more than the minimum and no way I’m paying this off earlier
You don't need to be making an extra payment each year. You just need to be making all your payments the day you get paid.
Interest on your mortgage will typically be calculated daily, charged monthly. If you get paid fortnightly but pay your mortgage monthly, then for a chunk of every month you have money sitting in your primary bank account not earning interest, when you could put it in your mortgage and have it saving interest. You can put exactly the same number of dollars into your mortgage every year and still end up better off simply by paying the appropriate amount of money into your mortgage every time you get paid.
Of course, any extra money you pay into your mortgage above the required payments will also make a big difference. Twenty dollars a fortnight, fifty dollars a fortnight - it's amazing how it adds up over the lifetime of your loan.
I just make big chunk payments as I can. This month my car insurance is due which I pay in full, so there really wont be any extra this month. We have 138k left on out mortgage, 6 years into our 30 year mortgage. I enjoy seeing the balance dropping quickly
Always great content, but enough with the cats, Kamel lol
I started out (when I was younger and cash-poor) by sending in the next month's principal with each payment. At the beginning of a home loan, most of your payment is interest, so even a small amount of extra principal at the beginning of the loan's duration makes a bigger impact than you might expect.
You do have to remember to check the box to direct it to principal, though.
I’m curious which is better bimonthly payments VS dividing the payments by 12 and pay that additional each month?
So I'm in a weird situation. I got out of grad school with a ton of student debt, and went with a modified gazelle mode to save it all up in a high yield savings account during the pause. Then I saved up enough to get into a fairly cheap house hack golden opportunity that I just couldn't pass up, so now I'm in more debt, but still have much of what I saved up held back in the HYSA. The student debt and mortgage are similarly sized, but I could literally pay one or the other off in about a year or maybe a little over a year while keeping a solid emergency fund. Which one should I prioritize? I kind of feel like outright owning a roof over my head that cash flows toward me in my late 20's would be pretty great, and then I can relax a bit but just stay intentional on the student debt and pay that off over like 6 years. Thoughts? I know it's not precisely following the baby steps.
I do bi-weekly + add an extra payment each month that is equal to the amount of 1 bi-weekly payment, If I keep paying this much I'll have my mortgage paid off in 12years instead of 30! Plus I'll save myself 200k in interest!
Is there anything we can do if the Mortgage company "Holds" our extra payments instead of applying them to the principal? It shows up as "unapplied funds" when I tell them I want to make a principal only payment.
It all depends on your interest rate. Interest rates being what they are now (~7%) it makes more sense to pay off early. With interest rates lower than 3% like in the past, you are losing real gains in the market by paying the mortgage early. One gets much further ahead mathematically by taking the extra you'd pay to principal and investing that. Do the math...
One choice carries risk, the other does not. You can make hella extra payments at the start of your loan and then decide to invest those extra funds later and have the best of both.
@@TaylorOwen Over the course of 30 years there's very little risk in the stock market historically.
Housing also does absolutely carry risk.
@@NiceGuyDan08 That’s exactly my point. I’d rather know my housing is secure by paying off my 30 year mortgage in the first 10 years, and spend the next 20 years investing my typical principle + interest payments. Am I missing out on 4% of interest growth over ten years? Maybe, idk I’m new to investing… but I’ve done dumber things in life.
@@TaylorOwenTaylor Owen for the Win! 💯
I love the humor!😂
George just wondering what you think about all this hype on velocity banking to pay off your debt and mortgage in record speed...OH I love cauliflower by the way....
velocity banking is just a shell game.
Heeey we love cats George! Be nice to the strays! They can’t help it! 🐈
I don’t disagree with this but I think people should in general be prioritizing maxing out Roth and 401ks first. It’s not that you can’t put more down than the principal it’s just you shouldn’t disrupt from an optimized retirement savings plan to pay off a 4% mortgage
I’ve got a cheap mortgage (2.7%) so it’s hard to convince myself that I should pay it off with inflation running so high (over 3%) but based on this channel I’m now paying 2x my monthly payment so that my 30 year gets cut down to a 15 year. I could pay it off today but then I’d drain my savings, which is earning 5% at the bank, and paying it in 2024 dollars when in the future, dollars will be worth less and I can pay it off with cheaper future dollars.
If you are paying twice the monthly payment you will be done a lot sooner then half the time. Take the time to do the math.
Pay it off. The peace of mind is priceless. To each his own. Cheers!
Agreed. I have a 15-year mortgage with Chase @ 2.49%, but I also have a large CD at Chase earning 5%. They are essentially paying me MORE to borrow my money than I am paying to borrow their money.
@@vintagecrazyjay4970never drain all of your savings to pay something off. Especially if it’s not hard to make the payment. Stack some more cash before paying off. Never know what might happen.
Ok but hear me out. Mathematically it makes much more sense to just keep a healthy financial cushion (3-6 months emergency savings) and put the rest into S&P 500. 3% is basically the inflation rate, you’ll be much more ahead if you don’t put it all in mortgage and invest the difference instead
With a 2.25% 15 year mortgage and getting 5+% on my savings my "hack" is shovel as much as I can into the savings account then when the rate drops BOOM I cut a chunk off my mortgage. I'm way past the "but you might get tempted to spend on something else" stage of life but I am it the, could have a really big emergency where the extra money could help so having this mortgage sinking fund rather than tie the money up into my house gives me more peace of mind.
Link to mortgage calculator?
That’s my foods food should have been Ron Swanson in parks and rec 😂
I'd rather put extra in my retirement
Same strategy for car payment?
Life hack.
First house is a quadplex with 3% down.
A good realtor can find one that will pay its own mortgage and give you an extra $400 to potentially even $1000 extra on top. (Yes I’ve seen it.)
Take that extra cash and pay off the mortgage.
Or.
Don’t?
Save it, buy your next quadplex, and make twice the income.
Save it, in half the time, your next quadplex, and so on and so on.
The real estate game isn’t for everyone.
But ideally?
At least find a way for something to pay your mortgage for you, if you don’t want to get into real estate this will at least allow you to pay off debts much faster. 🙏
Our first home purchased in 2019, got a 30yr at 3%.
Made payments weekly and doubled the amount to lower principal directly. To be paid off in 13yrs instead of 30.
But decided to sell at market peak in 2022. Made a huge amount, more than twice we paid for it in 3yrs.
DCA'd into bitcorn at the lows. 😅
Hey now. Don't be hating on cauliflower pizza crust. It's actually really good.
i have a mortgage with a 2.625% interest rate and my bank offered a 4.5% high yield savings account, so the money i was going ot put towards my mortgage i put in the savings account where i cover the cost of the mortgage interest and get a little bit more back. and i also feel a little bit more comfortable having it more readily available becasue if i put the money into the house, then in order to extract that money to use, i would have to sell my house or take out a heloc or something, so overall i feel more comfortable having my money earn more interest than im paying, and be more accessible. any thoughts?
A lot of people are doing that right now. The challenge will be when the interest rates drop and your HYSA only makes 3%, at that point the taxes you pay on the interest will probably bring the effective earnings to about the same or lower, so you may throw a big chunk of money at it to start saving more in interest.
@@LukeofAllTrades. when the HYSA interest rate drops he should put his cash in an ETF or mutual fund.
@@V8Brah That's certainly a popular approach, just have to watch for taxes and such. I plan to just pay off the mortgage and then invest the payment plus the extra I had been putting towards it. Simpler for me.
"thats been in heat since Tuesday and won't stop screaming" 😆😆😆😆
George, I split my payment 3 times & make that payment 3 weeks of each month. I'm not making any extra payments over the year but I'm lowering the principal each time, right? therefore lowering the interest, correct?
@JordanUnruh No. It does not matter when you make payments in a month. The payments are applied to principal & interest only once, at the end of the month.
Many lenders will not even accept partial payments.
It is because of how often the interest is calculated
We were afraid of a strike slashing our income so did low payments biweekly and doubled them. Then if disaster struck we could return to single payments. Every renewal date we dumped our income tax money on the mortgage ballance. Worked well for us.
We paid our regular mortgage payment monthly, and then paid the next two principal payments monthly (effectively paying three principal payments monthly, along with one interest payment).
And how long did you do that for?
@@chief5981 it was towards the end (about $80k remaining). Did it for three years or so. We found RS late in our mortgage payoff game. If we'd done it earlier, obviously we'd have paid it off sooner.
Just make one additional principal payment every year and call it a day. Works out to be about the same with bi weekly payments.. For 30 years it be reduced to about 23 years..
Good morning
good morning
Mornin’! ☀️
I have a mortgage (
Albino broccoli 😂 You crack me up!
Great advice, George. Just an FYI - I believe your emoji, Whitney, is a Pilot, not a Flight Attendant. Note the Pilot hat
I bought a duplex with the intention of living in half. The other half pays the entire mortgage. The plan is to move to a single family home and the income from the half I currently live in (and will move out of) will pay for more than half of the new mortgage.
Can anyone help me where to find similar background as it is in 1:43 for example? (the black with scratches) ? :D ( I know that Im out of the topic) but thank you 😍
I am not sure about the states but Canada has accelerated payment programs
Property taxes and or state and city income taxes. For us, they eclipse the mortgage, and they never go away.
My mortgage company applies the half payment once the second half payment is received. 😮
1:40 does that $1,775 monthly mortgage payment include taxes and insurance, or is it just principal and interest?
These calculations are always P&I, unless stated otherwise
@@Reck_614 thanks! That's what I thought, but wanted clarification. I'm different than most and consider the entire PITI as my mortgage payment.
I have $110k left on my 30 year fixed. I'm trying to talk the wife into making double payments a month. I'm pretty sure she will agree to it and then it will be paid off in only 6 years, saving over 35K in interest.
Hiring an mma coach works be ideal lol
Pay 408€ more on our mortgage every month. It’s tough but we already cut off 10 years. Now we are going with lump sums to finish it 2036 instead of 2040
Or get a 1st lien Heloc? Pay simple intrest and not devils arithmetic (amortized intrest).
A big flaw in your analysis is investing the $1775/month. If the payment is PITI, you still have to pay property taxes and insurance on your paid for home, so you really only can save the principal + interest portion of your payment (approx. $1000-$1100/month depending upon your taxes). The context of the video is great, but I felt you missed it there.
Aye don’t talk about my cauliflower like that…😂
A home is an investment similar to other investments. My mortgage is 2.75% fixed, and I have a $1600 payment every month. I could put another $400 into the mortgage every month, or I can put that money into my 401k. The $400 into the 401k is a better choice than $400 extra into the mortgage every month. The numbers work out better. Investing that $400 into even a basic index fund would work out better financially.
Of course it takes you actually investing that money. I think the Ramsey assumption is that for most people, it is mentally easier on them to pay down debt rather than look at a long term investment strategy.
They gotta tow that Ramsey line… 😅
You’re not accounting for risk. The Ramsey method is to put 15% of your gross (not including any match) into your retirement investments. Anything above 15% goes to your mortgage.
But even in your case, the mortgage pay down is a guaranteed 4% return. Investing your money in stock market is not a guaranteed return. It’s all about your risk tolerance
First step find a house that’s under $300k :(
This is generally good advice, with one caveat: it depends on your interest rate. If your mortgage is at a 2% interest rate, but your high-yield savings account earns you 4% interest, then it may actually be a better idea to put that extra money in the HYSA. Earning 4% interest on that money, but losing 2% due to mortgage interest, still gives you a net gain of 2% on that money.
What to do if your banks only allows you to pay only 20%extra?And you like to pay more
Georgian here…. Do not take your kid to Six Flags over Georgia… it’s gotten ghetto and dangerous.
The whole USA is ghetto and dangerous.
Could I just save the extra money every month towards the house into saving and pay it off all at once?
I like this, but it isn't a "hack". It is simply paying more monthly. And make sure there is no early payoff penalties.
*depends on your mortgage company
I have Rocket mortgage. While they allow bi-weekly payments, they hold the first payment in escrow until the second payment is received then apply them both as one single payment for that statement period. So you don’t actually receive the interest saving aspect of making more payments
That is wild. How does that make any sense for them to do, why would people go with them knowing they do it, and it's sketchy as hell if they don't tell you before signing on 😮
@@TH0KH I had no idea they did that before signing up. It might be buried somewhere in their website when digging into payment options, but it wasn’t my main consideration when getting the loan.
They won me over because of incentives, the other lender I was working with wanted $43k total out of pocket to get the home vs Rocket only required $26k with the same interest rate and monthly payment. Plus Rocket threw in free refinancing (no closing costs to refinance) ontop. So overall I still made out well despite not having this payment frequency option.
If I make extra payments beyond the minimum they of course take that towards the principal and apply it right away, so there is always that option, you just don’t get to arbitrage the interest via splitting your existing payments
Still pay an additional payment. Bi weekly = 13 payments. Monthly = 12
@@TH0KH They do it that way because the standard mortgage computes the interest once a month at the end of the month. Your payment is applied to the mortgage on the last day of the month.
All this is laid out clearly in every mortgage note. You get that paperwork at closing. Most people never bother to read it, they just look to youtube for answers.
Correct.
… vs investing an extra payment.
Given that mortgage interest is tax-deductible and even current interest rates are below the average rate of return for the stock market, you'd be better off investing that $190 every month. IF you have the discipline to see that ever-increasing account balance and leave it. Don't try to time the market, don't pull money out for toys or emergencies, just buy a good index fund and let it grow.
Tax deductible?? Nobody itemizes anymore. Trump gave us $25k standard deduction
@@chief5981 wierd, because I just itemized. Largely because of my mortgage interest deduction.
And you're still ignoring the fact that market returns are higher than interest rates.
Ok, the cauliflower had me giggling!
I completely agree, George, but I thought with your gluten allergy, you might appreciate cauliflower pizza crust 🤷♀️
Cauliflower is my favourite veggie 😂
I don't think all places let you make partial payments.