Discussion in 'Bullion Investing' started by Dustin McDaniel, Jan 16, 2024.
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@ldhair on this one. I got lucky when I purchased gold in the late 1990's. I got very unlucky when I purchased silver in the early 2000's.... Man, precious metals are fun and awesome to hold and study. But they are a terrible investment vehicle. Only spend what you would consider extra cash.
that means paying down the mortgage
so be it, but self satisfaction always comes
first in my book
Dave Ramsey decries buying gold and silver from what I can tell he is against it. However I do agree that paying mortgage off is a good thing.
Get an Amortization sheet from your lender.
After you have saved up 6/12 emergency fund, paid 2 months worth of mortgage payments ahead on your loan...
With the Amortization sheet you can figure out how much money you can save each month on the interest IF you just make an extra PRINCIPAL payment.
I doubt you can do better with another investment, BUT you won't necessarily see a return till the end of your mortgage.
I'm not a financial advisor, maybe I should be
Isn't there someplace to lower the burden when you reach retirement age?
Let's see that Amortization sheet
That will tell you what you want to know ( it's a crystal ball or sorts )
Based as an investment, Ramsey doesn't recommend precious metals he recommends maxing out your 401k / IRA accounts first. However I like to keep "cash on hand" for emergencies so I mix in precious metals as a way to offset inflation. Each to his own I suppose.
So our kids student loan debt was paid off, our mortgage was paid off, zero CC balances, no car loans, and it feels incredible. Not only does the elation of being debt free lift our spirits, but the additional investible cash has permitted us to accelerate retirement.
Everybody has different triggers to happiness and freedom. Ours was the light at the end of the tunnel during the 8.5 years of putting every available cent towards our mortgage, while not using charge cards to sustain our day to day life. Don't get me wrong, those 8.5 years was a sacrifice. We took one extravagant vacation to Korea for our sons wedding. Other than that, our passports expired with only that one international stamp in it. Cars were not luxury. Meals were cooked at home with dining out reserved for special occasions. We bit the bullet for the 8.5 years. But looking back, it was soooo worth it.
Do what's right for you? Nobody can tell you what your recipe to happiness should be. Maybe they can give you various options to consider, but in the end you not only have to be the one to decide which is right, but you have to be the one to execute the plan.
I'm sorry Jersey, there's just too much misinformation here to not address it.
1- Correct, you can specify where the extra payment goes. However, it can only go towards principal or escrow. It cannot be applied to interest. Your mortgage payment is made in arrears. Not in advance. A bank cannot charge you interest upfront. The interest is paid on the outstanding principal balance. So at the end of the month the interest has accrued for the next monthly payment.
The ONLY time during a mortgage that you pay interest in advance is at the closing.
If you close, for instance, on March 3rd, at closing you'd make an interest only payment for 29 days, from March 3rd thru March 31st. Your next mortgage payment would be due May 1st, 59 days after your closing. The May 1st payment would include principal plus only the interest accrued from April 1st thru April 30th since you already paid the interest for the month of March at closing, on March 3rd.
If you close, for instance, on March 30th, at closing you'd make an interest only payment for 2 days, March 30th thru March 31st. Your next mortgage payment would be due the same day as the above example, on May 1st, but only 32 days after your closing. This May 1st payment would include principal plus only the interest accrued from April 1st thru April 30th since you already paid the interest for the month of March at closing on March 30th.
The banks do not load any interest up front at all. Zero up front. It definitely seems like it is front loaded only because your principal balance is high. So making your regular monthly mortgage payment, based on a standard 30 year mortgage, applies so much more of your payment to interest than principal at the beginning of the loan, it makes it seem like forever until the principal balance comes down enough to where your monthly payment goes more towards principal than interest.
This is why it is so advantageous to add anything you can to your monthly payment and apply it to principal*. Even it you only add an additional $50/month towards principal, that's $600/year extra. It will shorten the life of your loan.
Here's another piece of misinformation. You cannot pay months ahead on your mortgage. When you make your monthly mortgage payment and you add an extra full payment (for instance, making 2 payments at once), it will not, I repeat, it will not pay your mortgage in advance so you don't owe the next month when it comes due. The extra payment will be applied to either principal, so long as you direct the bank to apply it as such, or to escrow. It will shorten the maturity date of your original loan, thereby reducing the amount of interest you pay over the life of your mortgage.
In case anyone is interested where this information is coming from, I was a mortgage broker before I retired. My advice stands. Pay down your principal faster with extra principal payments monthly. It can save you many thousands of dollars in interest over the course of your mortgage. How many thousands? It all depends how big of a mortgage you started with. How much additional principal you send in monthly, and for how long you stick to this approach.
* If you make extra principal payments, as I do recommend, it is extremely important to monitor EVERY SINGLE MONTH that the bank applied the payment to principal, as instructed. I personally have seen the bank misapply MY payment, every April, to escrow, not principal. It seems they had a glitch in their system. It took me about 4 years to see the pattern and have them correct their system. So stay on top of it. They aren't perfect.
But, You have a register/payment schedule/Armoratzation sheet.
January's payment gets paid off in January.
February's payment gets paid off in February.
If you pay an extra full payment (principal and interest)
In March for March and April, your April payment is PAID.
It's just paid early and NO you don't need to pay another payment in April because you already paid the payment for April in March.
I know this first hand because I paid 3 months in advance to get ahead of my mortgage just in case things went south where I might have been late on a payment.
I then started paying the regular payment along with a Principal Only payment each month till my mortgage was paid off.
Seniors can get a tax freeze, but you have to be almost destitute to qualify.
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