I have been using this online calculator (free) and it has helped me keep on track with my yearly financial goals regarding my mortgage. There are several options for additional payments and this includes property taxes and insurance too. Just thought I would share it if it could help anyone. I found the mortgage/homebuying experience very confusing and to visually see it this way has helped.

Right after we got our first mortgage, we were eager to make extra payments and see the balance drop much faster than scheduled. It was a mistake. Even though our rate was 7.75% for a little while! We weren't maxing out tax-advantaged savings and even since doing that, building other savings has also been much better financially than paying down the mortgage (which is now an obvious bargain rate at 2.625%). I suggest you also look for some charts on what your extra payments would probably do if you instead invested them in the S&P 500 for 20+ years.

My mortgage is at 3% for the next 5 years. My net worth increased 16.51% last year helped by Vanguard funds like Vanguard Extended Market (up 16.13%), Vanguard Primecap (up 10.72%), Vanguard Value Index (up 16.86%).

Even assuming a high tax rate, that's 3 times what the mortgage costs. While these returns are not guaranteed every year, paying off your mortgage is often your worst investment.

BostonOne

Senior Member - 4K

posted: Jan. 25, 2017 @ 2:02p

That calculator is nice. In the past I've used dinkytown.net. Their UI is much worse, but they have a wide variety of calculators.

jsssm

Happy Member

posted: Jan. 25, 2017 @ 7:14p

EradicateSpam said: This ^^^^

My mortgage is at 3% for the next 5 years. My net worth increased 16.51% last year helped by Vanguard funds like Vanguard Extended Market (up 16.13%), Vanguard Primecap (up 10.72%), Vanguard Value Index (up 16.86%).

Even assuming a high tax rate, that's 3 times what the mortgage costs. While these returns are not guaranteed every year, paying off your mortgage is often your worst investment.

You are correct... with hindsight! But do you expect to get the same return next year? What happens if its red, even if its -2%, then you have a 5% loss since you missed out on the guaranteed 3%. It's always a measure between risk and reward. The answer is easy in hindsight, but more uncertain in the present.

love4money

Loyal Member

posted: Jan. 25, 2017 @ 7:29p

Nice one but it does not have the option to calculate with extra payments and bi-saver program payments (to know how that will affect the amortization table).

My mortgage is at 3% for the next 5 years. My net worth increased 16.51% last year helped by Vanguard funds like Vanguard Extended Market (up 16.13%), Vanguard Primecap (up 10.72%), Vanguard Value Index (up 16.86%).

Even assuming a high tax rate, that's 3 times what the mortgage costs. While these returns are not guaranteed every year, paying off your mortgage is often your worst investment.

You are correct... with hindsight! But do you expect to get the same return next year? What happens if its red, even if its -2%, then you have a 5% loss since you missed out on the guaranteed 3%. It's always a measure between risk and reward. The answer is easy in hindsight, but more uncertain in the present.

Even a year of -2% would be fine, given 2016. Long term I always beat 3% on average by a wide margin.

Cal166

Senior Member

posted: Jan. 26, 2017 @ 11:03a

SlimTim said: That does look like a nice calculator.

Right after we got our first mortgage, we were eager to make extra payments and see the balance drop much faster than scheduled. It was a mistake. Even though our rate was 7.75% for a little while! We weren't maxing out tax-advantaged savings and even since doing that, building other savings has also been much better financially than paying down the mortgage (which is now an obvious bargain rate at 2.625%). I suggest you also look for some charts on what your extra payments would probably do if you instead invested them in the S&P 500 for 20+ years. Another way to look at it by using the calculator, let's take an example at $300k/30yrs/4.25%. At the end, you'd have paid $185K in interest alone. If you would put in $5,000 ever year in extra payment, you would save $85K-90k.

BostonOne

Senior Member - 4K

posted: Jan. 27, 2017 @ 6:58a

Cal166 said: SlimTim said: That does look like a nice calculator.

Right after we got our first mortgage, we were eager to make extra payments and see the balance drop much faster than scheduled. It was a mistake. Even though our rate was 7.75% for a little while! We weren't maxing out tax-advantaged savings and even since doing that, building other savings has also been much better financially than paying down the mortgage (which is now an obvious bargain rate at 2.625%). I suggest you also look for some charts on what your extra payments would probably do if you instead invested them in the S&P 500 for 20+ years. Another way to look at it by using the calculator, let's take an example at $300k/30yrs/4.25%. At the end, you'd have paid $185K in interest alone. If you would put in $5,000 ever year in extra payment, you would save $85K-90k.

If you instead took that $5K a year and invested it at 4%, you would end up with almost $300K (150K of which is the principal you invested) after 30 years.

anrea

Member

posted: Jan. 27, 2017 @ 8:19a

love4money said: Nice one but it does not have the option to calculate with extra payments and bi-saver program payments (to know how that will affect the amortization table). Right under property taxes and home insurance, there is a blue box that allows you to add extra payments and the dates you would like to add them~~ Monthly or Bi-weekly $starting from Yearly $starting from Quarterly $starting from One-time only $on

ppsninja

Member

posted: Jan. 27, 2017 @ 11:36p

Best calculator

https://m.drcalculator.com

triggerhappy007

Senior Member - 3K

posted: Jan. 29, 2017 @ 10:22p

BostonOne said: Cal166 said: SlimTim said: That does look like a nice calculator.

Right after we got our first mortgage, we were eager to make extra payments and see the balance drop much faster than scheduled. It was a mistake. Even though our rate was 7.75% for a little while! We weren't maxing out tax-advantaged savings and even since doing that, building other savings has also been much better financially than paying down the mortgage (which is now an obvious bargain rate at 2.625%). I suggest you also look for some charts on what your extra payments would probably do if you instead invested them in the S&P 500 for 20+ years. Another way to look at it by using the calculator, let's take an example at $300k/30yrs/4.25%. At the end, you'd have paid $185K in interest alone. If you would put in $5,000 ever year in extra payment, you would save $85K-90k.

If you instead took that $5K a year and invested it at 4%, you would end up with almost $300K (150K of which is the principal you invested) after 30 years. It's not a fair comparison. Your example starts at $150k, and the one above starts at $0. If you also start at $0 and invest $5k at 4% per year for 17 years (extra payments will reduce it to this) and total investment of $85k, you will end up with $123k before taxes. That's $38k, not $150k.

Above user used $240k as the loan amount.

BostonOne

Senior Member - 4K

posted: Jan. 30, 2017 @ 8:36a

triggerhappy007 said: BostonOne said: Cal166 said: SlimTim said: That does look like a nice calculator.

Right after we got our first mortgage, we were eager to make extra payments and see the balance drop much faster than scheduled. It was a mistake. Even though our rate was 7.75% for a little while! We weren't maxing out tax-advantaged savings and even since doing that, building other savings has also been much better financially than paying down the mortgage (which is now an obvious bargain rate at 2.625%). I suggest you also look for some charts on what your extra payments would probably do if you instead invested them in the S&P 500 for 20+ years. Another way to look at it by using the calculator, let's take an example at $300k/30yrs/4.25%. At the end, you'd have paid $185K in interest alone. If you would put in $5,000 ever year in extra payment, you would save $85K-90k.

If you instead took that $5K a year and invested it at 4%, you would end up with almost $300K (150K of which is the principal you invested) after 30 years. It's not a fair comparison. Your example starts at $150k, and the one above starts at $0. If you also start at $0 and invest $5k at 4% per year for 17 years (extra payments will reduce it to this) and total investment of $85k, you will end up with $123k before taxes. That's $38k, not $150k.

Above user used $240k as the loan amount. Good point. I assume starting at 0 (not $150K), $5K a year for 30 years at 4%. Still, my original point holds - the "savings" of $85K-$90K wasn't a fair comparison either. You'd have $123K in investments (versus $85-90K in savings) at the end of the 17 years with only a 4% return.

hairybeast

Tired Member

posted: Jan. 30, 2017 @ 10:10a

BostonOne said: triggerhappy007 said: BostonOne said: Cal166 said: SlimTim said: That does look like a nice calculator.

Right after we got our first mortgage, we were eager to make extra payments and see the balance drop much faster than scheduled. It was a mistake. Even though our rate was 7.75% for a little while! We weren't maxing out tax-advantaged savings and even since doing that, building other savings has also been much better financially than paying down the mortgage (which is now an obvious bargain rate at 2.625%). I suggest you also look for some charts on what your extra payments would probably do if you instead invested them in the S&P 500 for 20+ years. Another way to look at it by using the calculator, let's take an example at $300k/30yrs/4.25%. At the end, you'd have paid $185K in interest alone. If you would put in $5,000 ever year in extra payment, you would save $85K-90k.

If you instead took that $5K a year and invested it at 4%, you would end up with almost $300K (150K of which is the principal you invested) after 30 years. It's not a fair comparison. Your example starts at $150k, and the one above starts at $0. If you also start at $0 and invest $5k at 4% per year for 17 years (extra payments will reduce it to this) and total investment of $85k, you will end up with $123k before taxes. That's $38k, not $150k.

Above user used $240k as the loan amount. Good point. I assume starting at 0 (not $150K), $5K a year for 30 years at 4%. Still, my original point holds - the "savings" of $85K-$90K wasn't a fair comparison either. You'd have $123K in investments (versus $85-90K in savings) at the end of the 17 years with only a 4% return. From a net worth comparison, you will be in about the same position at year 17 (roughly around $1K in favor of paying off the mortgage sooner). The real difference, assuming you invested all of the saved mortgage payments including the $5,000 overpayment for the remaining 13 years, you would have approximately $40k more by paying off the mortgage early. This only works out because the mortgage rate is higher than the expected investment return which is why it would make sense to pay it off earlier.

triggerhappy007

Senior Member - 3K

posted: Jan. 30, 2017 @ 2:59p

BostonOne said: triggerhappy007 said: BostonOne said: Cal166 said: SlimTim said: That does look like a nice calculator.

Right after we got our first mortgage, we were eager to make extra payments and see the balance drop much faster than scheduled. It was a mistake. Even though our rate was 7.75% for a little while! We weren't maxing out tax-advantaged savings and even since doing that, building other savings has also been much better financially than paying down the mortgage (which is now an obvious bargain rate at 2.625%). I suggest you also look for some charts on what your extra payments would probably do if you instead invested them in the S&P 500 for 20+ years. Another way to look at it by using the calculator, let's take an example at $300k/30yrs/4.25%. At the end, you'd have paid $185K in interest alone. If you would put in $5,000 ever year in extra payment, you would save $85K-90k.

If you instead took that $5K a year and invested it at 4%, you would end up with almost $300K (150K of which is the principal you invested) after 30 years. It's not a fair comparison. Your example starts at $150k, and the one above starts at $0. If you also start at $0 and invest $5k at 4% per year for 17 years (extra payments will reduce it to this) and total investment of $85k, you will end up with $123k before taxes. That's $38k, not $150k.

Above user used $240k as the loan amount. Good point. I assume starting at 0 (not $150K), $5K a year for 30 years at 4%. Still, my original point holds - the "savings" of $85K-$90K wasn't a fair comparison either. You'd have $123K in investments (versus $85-90K in savings) at the end of the 17 years with only a 4% return.

Oh I see what you meant now about the $150k was the total investment over 30 years. At 4% it's probably a wash.

I paid off my 30 year $128k 4.875% mortgage off early. Got it 5/2009, refinance 5/5 ARM in 2013 balance of $90k 2.5%. Paid off October 2016. I thought the stock market was going to go down. I'd rather have peace off mind. Looking back I should have invested that money, but hindsight is 20/20.

The best calculator, IMHO is available at http://www.vertex42.com/Calculators/home-mortgage-calculator.htm... and you can download it to excel. Lets you fill in the "additional payments" wherever you like and calculates the interest payment as well as the pay off date that results. Check it out.

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