Last month, we paid 3.5 times our mortgage payment. In part, it was a good month for side hustling — hello, tutoring before finals — and in part because it was one of the two months a year when I score an extra paycheck. While I didn’t put my entire paycheck towards our mortgage*, I did put a large chunk of it. And now that we’ve got this momentum going, it’s going to be really hard to return to our standard double payment each month.
While I’ve talked a lot about mortgages in general here and I’ve generally alluded to the payments we make both on the blog and on Twitter, I thought I’d lay out all the hairy details in this post. So, if you’d like some more insight into the $200,000+ 30-year mortgage we’re trying to tackle in ten, this post is for you:
We took out a 30-year mortgage at 3.5%, which amounts to just under $1000 a month. This number does not include property taxes since our taxes are not in escrow. We also didn’t pay PMI. Having to pay the bank interest was painful enough. I was not going to put us in a position where someone else got to keep my money until tax time. And PMI seems like an easy way to help people overextend themselves. So, we owed the bank over $200,000 in the span of 30 years. When you crunch the numbers, though, it’s actually more like $350,000 over the span of 30 years. Ouch.
The Realistic Goal
Since paying an extra $150,000 is absolutely dizzying to me, we committed to trying to always double our payments. Essentially, we were going to take a 30-year mortgage and have it paid off in 15 years. Since we bought the house almost a full year before we got married and moved in, we made standard payments for the first year. We had a wedding to pay for, I was in grad school, and we both had new cars. I know, I know. But once we moved in and paid off both of our cars, we started doubling our payments and didn’t look back.
Paying off our mortgage in fifteen years would put me at 42 years old. Not too shabby to own a home free and clear in my early forties. I can live with that. But the thing is, I don’t want to. When I first started blogging, I mentioned how whatever money I make side hustling also goes towards our mortgage. It’s not particularly fun, but it’s very addicting. I love seeing the number plummet. There’s something so satisfying about imaging the bank crying when they see a young couple doubling or tripling each payment. Seriously, they do cry, right?
We Won’t Refinance Right Now
There are so many unknowns in our lives right now. Both Mr. P and I need to complete more graduate work to max out our pay scales. Having a house can be a huge money pit. My work might get their act together and actually let me invest in a halfway decent 403b company. We might even trade in our DINK status one day.**
Because our interest rate is fairly low at 3.5% and we’re cruising along with repayments, the fees and hassle of refinancing don’t quite add up. Additionally, if we ever found ourselves in a place where we had to be less aggressive with our repayments, we could simply recalibrate our budget without having to jump through any other hoops. It may not be everyone’s ideal, but it’s what works for us based on our situation and our number crunching.
*I got you, Vanguard.
**This is why I have to blog anonymously. If my mother ever heard me utter these words, there would be a nursery in our guest bedroom before I made it home today.
So Tell Me…Do you own or rent? Have you ever had to tackle a mortgage? What was your strategy? Feel free to leave links!