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Home > Summer is here, funds for summer are not

Summer is here, funds for summer are not

June 14th, 2013 at 11:09 pm

67 minutes my boy's in for summer vacation. I am determined he will not loll around in his room playing games all the time, and when I finish "I, Claudius" I can set an example for him.

Considering the principal paid since April 1999 on the house is a letdown: 170 mortgage payments, less than 46% principal paid. I know people who refinance for thirty year terms, they can't be expecting to make mortgage payments in their seventies, wouldn't it be a comedown to start at a low principal payment and have tens of thousands of dollars in interest? Why don't they just go for 5/1 ARMs?


Also not working this summer, but will sharpen my database skills. I'm housesitting, or at least accepted an invitation to housesit, up in a Vancouver suburb for a week-and-a-half: my idea of a good cheap vacation. Dunno if the boy is coming up with me.

6 Responses to “Summer is here, funds for summer are not”

  1. snafu Says:
    1371252746

    Mortgage: Are you paying taxes via your mortgage lender? Some people also pay mortgage insurance.
    Mortgage Amortization Schedule: A mortgage loan is not a simple interest loan. You are prepaying interest with only a minuscule amount to principal for the first several years. It's a good idea to print out the whole schedule if not provided by your lender. It really helps to add extra to your regular payment having established with the lender that the added sum is to be deducted directly from principal. Many mortgage holders will allow regular payments to be divided with half applied on the first of the month and 2nd half on the 15th. This results in 26 payments [2 extra] rather than 24 which works well for folks paid bi weekly.

    What activities have you researched and planned for your son? What programs are available in your community that DS is willing to participate in? What are his friends signed up for? If you are house sitting in a Vanc. suburb, who will monitor DS and logistics?

  2. MonkeyMama Says:
    1371254884

    Have you considered just getting a 15-year loan and treating it as a 10-year loan? The only way this does not work is if you don't have the discipline to pay the 10-year-amortization. But, you know, set up automatic payments and just pretend it's a 10-year-loan. You figure out how much extra to pay every month to pay it off in 10 years, and wala. We can help you crunch the numbers for how to implement this strategy.

  3. PauletteGoddard Says:
    1371260668

    Tragically, the credit union home loans website produces errors when I attempt to look at rates or use a refinance calculator.
    Thanks for the offer, MonkeyMama. I accept.

    Let me supply the proposed balance, and the terms and rates with estimated closing costs:
    Balance: $104100
    Option 1: 15-year APR: 3.607% --No Discount Points-- Est. Closing: $5930
    Option 2: 12-year APR: 3.4% --No Discount Points-- --No Closing Costs--

    Current P & I: $1036.13
    Current Escrow: $327 (taxes plus insurance)

    Assume credit score adequate for these options.

  4. PauletteGoddard Says:
    1371261678

    @snafu Martial arts is recommended for my boy, and he enjoys that. He also likes video games, and the library system hosts video games for teens at no cost to us.
    DS can take the bus down for martial arts (3.2 km away) or DH can drive him.
    I do pay taxes and home insurance through my lender.

  5. MonkeyMama Says:
    1371733120

    They have a 12-year term? That's interesting. I am just going to run the 12 years because it is a lower interest rate.

    12-year mortgage is $881.40/month to pay off in 12 years. Add $145/month, and total payment is $1,026.40/month, payoff is 10 years. That is just P&I.

    I am just using excel (er, open office, which is free), but I am sure there are online calculators where you can run "extra principal scenarios." Just throw in an amount and adjust until you find the 10-year-payoff.

    I will run the 15-year - I assume maybe this is at another financial institution?

    15-year mortgage is $749.67/month to pay off in 15 years. Add $285/month, and total payment is $1,034.67/month, payoff is 10 years. I assumed you would pay cash for closing costs. Seems like this would be a pointless refinance, since it does not reduce payment or remaining term?

  6. PauletteGoddard Says:
    1371765530

    @MonkeyMama Thanks for doing the work. That's $9.73 less a month, with 120 months, so if I have to pay $1120 or more in closing costs, this is not financially preferable. Now that the credit union home loans website calculators and rate sheets have been restored (I complained on Twitter, they responded within 15 minutes and repaired in 20), I can look at the ARMs, but I'm not liking those either.

    5/1 ARM: 2.675% Total Monthly Housing: $736.86 Total Closing Costs, Prepaids, and Reserves: $4,963.26
    7/1 ARM: 3.125% Total Monthly Housing: $771.48 Total Closing Costs, Prepaids, and Reserves: $5,131.73
    3/1 ARM: 2.5% Total Monthly Housing: $736.86 Total Closing Costs, Prepaids, and Reserves: $5,083.67

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