TweetWell, I have been toying with some numbers and going back and forth today and I finally got the ball rolling. I will be knocking 7 years and 1.625% off my mortgage in about 45 days. I thought about refinancing for 10 but with my wife quitting work next year to go to nursing school, I didn't want to get myself in a bind, so I went with 15. That's still a TON of savings over where I was. I could kick myself in the nuts for going 30 to begin with!! I wouldn't have much left at all now I had I went with 15 or less. But it is what it is and at least I am saving.


Now to look at my homeowners and auto insurances to see if I can save some money there!!!

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Originally Posted by JUISEBOY

Just in case you didn't know or those who read this that don't...if you have a 30 yr mortgage and pay one extra payment a year it knocks it down by seven years. Also if you pay bi-monthly it will reduce the amount the same and the amount financed even more so. I personally would never reduce my term. I would know what payment I need to pay off the lien in 15 years and then make that payment routinely if that was my goal. That way if you get laid off, partner stops working and cannot contribute income then things aren't tight. Just my .02 and I was an underwriter for 12 years so I know a few things concerning this...

Agreed. But you can do the same with a 15. In my case, one extra payment a year comes out to about 80.00 per month. I refinanced mine and knocked 7 years off immediately for an extra 40.00 per month.....not to mention it knocked off over 100k dollars in savings over the term of the mortgage. That is hard cash in my pocket!! I wanted to go to 10 but my wife is going to nursing school next year and I didn't want to be in a bind. Now I can do the 15, pay extra on it, not get in a bind, and still get it paid off in over half the time as where I was.

I originally did 30 and was paying extra on the principal for years and it was down to 22 years left. I think dropping your terms is WELL worth it if you have no problems affording it. I mean, you save a ton right off the bat, your interest rate usually drops at least 1.5% (otherwise, why do it), and your payments are amazingly not that different. It's a win all the way around, so I don't see why anyone wouldn't want to do it...