Pay less interest on your mortgage

okay matt the mortgage guy here today i'm going to share with you neat ways to look at extra principal payments now before i get into it my channel is all about transparent information in regards to mortgage real estate personal finances so before i get into it please if you don't mind you don't even have to smash the like button you know what you could do you could hover your finger over it you could gently caress the like button as long as it gets pressed i appreciate it don't smash it all right without further ado let's get into it i have this conversation day in and day out i get excited about it my clients get excited about it so i know there's going to be a certain portion of the demographic that gets excited about extra principal payments on your mortgage because it's really neat it's neat to see how you can mess with that 30-year amortization and start to gain some traction a few payments here or there start chunking off the period it takes you to pay off your mortgage because for most people this huge 300 400 5000 mortgage seems like a mountain of debt as as they can see these little payments kind of chipping away and paying off their mortgage it's pretty exciting stuff so without further ado i'm going to take you to my old faithful i've been using this rinkity dinkity mortgage x extra payment calculator that's where we're going um so i type in mortgagex extra payment calculator and scroll down here it is the site is called mortgage x and you could probably go to that site when i say rinky dink wait until you see this thing it is not fancy but for me it's got all the information in one spot so many things i found online are just a lot more complicated so do me a huge favor if you find a really good mortgage calculator online that shows you the impact of extra payments in a really clear way please share it below i'd love to see it other people that are stumbling across across this video would love to see it as well so here we go let's move my big old head out of the way and let's just start going to town you've got a 30-year mortgage and you've got a three and a quarter interest rate of an interest rate that high i'm sorry rates are extremely low 2020. let's say you owe 350 thousand now you're paying your monthly mortgage payment taxes insurance everything else included and some people throw an extra 200 towards principal 300 towards principal whatever it is all you have to do on this calculator enable monthly pre-payments this one's not starting until 2021 and so enabling these monthly pre-payments right from the start if you just told yourself hey i want to apply 350 towards principal every single month not everybody could do that maybe you're putting 50 maybe put 100 whatever it is good on you for paying a little bit extra heed my advice and don't pay extra towards your mortgage that's got a sub 3 interest rate while you're neglecting 55 000 in credit card debt that's at 18 not a good idea but assuming all that stuff's paid off and you're trying to aggressively pay down your mortgage watch what happens i mean 350 bucks you just get in the habit of spending it on extra principal payments you won't even notice it you'll buy less lululemon you'll buy less starbucks but it's going to be in good hands here calculate now it's going to show i mean this site rinky dink right but it's all right it does the job it's gonna show you every month here's your regular payment 575 towards principal 947 towards interest and there's that extra payment and it's going to show you you can take a little shortcut and go to the final summary down here you are going to if you paid no extra payments you'd pay about 200 000 over life of the loan and three and a quarter is a good rate it's better than probably half the people have um but you're still gonna pay 200 000 in interest over life and loan making these extra 350 a month payments you're shaving 60 000 off of that you're paying a total of 138 000 in interest highlighted too much there um and eight years and three months off the loan so you're paying it off in 21 years and nine months that's pretty cool and literally i know there's people out there that are like me that could sit here day in and day out and just let's go back we go back twice okay i mean if you're in a higher rate mortgage even might be an investment property so you got something in the mid to high threes and you and you're telling yourself i'm gonna pay this investment property off by the time i retire and you still have 350 on it um as you'll see in the amortization schedule at a higher rate less is going towards principal but you know this thing's cash flowing 500 a month and so you're like i'm going to take that whole 500 that i'm cash flowing i'm going to apply it towards extra principal get this thing paid off because i'm trying to retire early look at that almost 11 years so you're paying that thing off in in 19 years and i use the investment property as an example because a lot of folks who own real estate they own investment properties the things making a few hundred are breaking even now while they're working and their goal is to have it paid off when they retire so that they no longer have that payment and their tenants rent payments are now twelve hundred fifteen hundred two thousand dollars in income in retirement so that's pretty cool so yeah that's that um a couple things that i wanted to mention here because i think it's um another common question i get let's say that you've got a 30-year loan or you're thinking about a refinance i had this question come up this week actually that's why i bring it up and somebody told me hey i want to i want to go into a 15-year loan and he's got an investment property so we're looking at 15 years on investment property the rates are in the mid threes he's already got a rate that's 3.625 so i told him hey all you have to do to pay this thing off in let's i think he's four years in 26 years with a 3.625 and i don't remember 4 19 we'll call it 419 000. so this scenario on an investment property he's asking me about a refinance and i and i reminded them there's no way you know investment property refinance those rates are higher than a primary you might get three and a quarter by paying a point but it's there's not enough spread you don't want to do that for such a small savings you want to turn this into a 15-year loan i'll show you how start uh throwing some some payments on here let's say you pay 750 extra i don't know if that's going to do it on this size loan 26 years left owing that much let's try a thousand remember it's a 26 year so it's paying off 11 years and four months earlier man that guess was pretty good it's gonna pay off in 14 years and eight months if you really wanted to figure out the exact math you can just um see this 9 70. probably a better way to do this but an old school dude do the old school way 11 years in one month so pay a little less than that 9.65 maybe probably just tell them hey put on autopilot pay an extra thousand a month it's going to pay off in under 15 years that's how you make it a 15 year you don't want to pay title fees lender fees all those fees um if you don't have to and on that same note if you're looking at different terms 15 20 30 and you're unsure you can always take a 30 you can always apply extra principal payments they are there's you're going to be hard-pressed to find loan products out there where you can't pre-pay you know the prepayment penalties that used to be quite common 10 to 15 years ago just don't exist anymore you can make prepayments on just about any loan you get so i think that's all i got just wanted to run through a couple different examples of that i'd really love for somebody who's watching this to be like matt this is the most outdated rinky dink mortgage calculator i've ever seen go to this website and lead me in the direction of something better than this i've actually got an app on my phone and i i didn't share that for a couple reasons one because i'm working on my desktop and two because it's quick in loans and uh mortgage brokers aren't fans of quicken loans uh they are in the in the business of deceiving consumers and really uh give mortgage a bad name so i don't even speak of them fools all right thanks for watching it was a pleasure uh having you here if you made it this you know 10 minutes long you you the real mvp thanks for watching until next time you

Channel: Matt the Mortgage Guy

Views: 113,435

Rating: 4.9362302 out of 5

Keywords: mortgage, pay off mortgage early, real estate, how to pay off your mortgage early, pay off mortgage, how to pay off your mortgage faster, extra mortgage principal payment, mortgage loan officer, mortgage rates, mortgage loan originator, mortgage coach, mortgage rates today, real estate investing, mortgage loan processor, real estate market, mortgage forbearance, pay off mortgage fast, making extra mortgage payments, mortgage broker, mortgage underwriter, home loan, homebuyer

Id: 7r__WjnJSjc

Length: 9min 28sec (568 seconds)

Published: Mon Dec 21 2020