Ways to pay my mortgage off faster

My husband and I built a home in 2008 and borrowed $1000,000.00. Our original mortgage was for 30 years at 6% interest with payment of $646.30 a month. We always paid $700. Two years later we refinanced for a lower interest rate. This time our beginning balance was $88,968.66 and we dropped to a 15 year mortgage at 3.75% interest. Our payment is now $647/month. We still continued to pay $700/month up until March of 2012, when we were able to start paying $1000/month. And last year we paid an extra $4000 with some our tax return. Our current balance is $65,131.86. We have asked at our bank about refinancing again and the loan officer we talked to says we would be better to just keep doing what we are doing; that we wouldn't save any by refinancing. What are your thoughts on this? We want to pay off our mortgage as quickly as possible and $1000/month is the most we can pay. Are there any other things we can do to pay off our mortgage faster?

Thanks!
Robin
robingjohnson
Asked Jul 29, 2013
If you can make more that 3.75% interest investing it than paying it on your mortgage, you're losing money by paying it off. Some high yield bonds pay a lot more than that. With the lower property values right now, it is likely you could put your extra money in investment real estate and make more than 3.75 % also.

While prices have been fairly stable for the last few years, inflation is an advantage for people owing long term debt because the money you borrowed would buy much more than the money you pay back. Suppose you are making 100K per year now and inflation drives your paycheck up to 200K in 15 years. The fixed interest rate on your mortgage stays the same. So in terms of real value, your paying only half as much on the second half of a 30 year mortgage.

Please understand that these are just ideas. To make strategies like the above work, you have to clearly understand what you are doing but the point is that paying off long term debt isn't always an advantage. As long as you have assets that are outperforming the rate on your mortgage, you're winning.


Rob
Answered Jul 29, 2013
Edited Jul 29, 2013

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