Trying to pay down mortgage.............

[tim2]

I want to sell my house and based on what I have seen selling in my subdivision so far this year it is obvious that I am going to have to pay down my mortgage in order to sell it.  (Selling it for a loss.)  So I am trying to find out if there are any suggestions on the best way to do this?  I have noticed that when I make a payment the amount that goes to principal is never the same exact amount - every month is slightly different each month.   Does anyone have any suggestions on how to get the biggest bang for my buck in paying this down?

[llecs]

Could you stay in the house if you had to? In other words, do you have to move? I don't know the answer to your question, but I foresee prices on the rise. Certainly it's a YMMV on the region, but any deficit will be short-lived. Prices are already on the rise nationwide, on average.

[Anonymous]

Your principal is never the same amount because mortgages are set up to be paid off on an amortization schedule. The more money you pay each month above and beyond your principal, interest, taxes and pmi if you have it, goes to your principal. What that means to you is that any extra money you put towards your principal now will chip away at the last payment in the schedule, whatever it may be. So, if your last payment is set to be $600 principal and you pay an additional $300 now you've lessened your last payment to $300. Pay another $300 and you've shortenEd your schedule by one month. It continues on in that fashion, extra payments chipping away at the last scheduled payment until its gone and your loan is paid off (early)

[IOBA]

Do you have an ARM or a fixed rate?

Do you log onto your lender's website to see your mortgage & payments?   The lender should have a button for an amortization schedule that is for your loan.   You will be able to see how your extra payments on principle chip away at the back end of the mortgage if it's a fixed rate mortgage.

Do you have to move?   It's usually better to stay in one place and stick it out.   The market will rise and fall.  If you are feeling too tight, consider selling some of your stuff, reducing your monthly bills, or having a room-mate.

[tim2]

I don't have to move.  However - I have spoken to several professionals and they are saying that these ARE the new prices for this area.  IF they went up (which they are not anticipated to do so) it would be at a miniumum of 5 years before even getting close to my current balance.

[IOBA]

Ok, I am a little confused.   What is your objective?  To move?  To have equity in your home?  To pay down your mortgage?

If you are planning on staying in your home long term, then what the market prices do around should not matter much.  In theory, you will need to pay to live somewhere.   If you can pay off your house early, that would be a wonderful feeling!

I believe (and this is totally my personal feeling) that a mortgage should be treated like any other debt and  paid off as soon as possible!   Always pay more than the minimum.

Maybe sitting down and figuring out the costs for selling your house (figure at least 8% closing costs), the cost of moving (moving truck?, utilities, etc), and the cost of a new place (purchase includes closing costs, down payment, turn on utilities, rental involves deposit, rent).   How much will it cost to move?   Worth it to stay?

[tim2]

My goal is to move.   I do not like the area or the house and want to move.  I currently owe more than it's worth so I am trying to pay down the mortgage in order to be able to sell.

[MarineVietVet]

---

@tim2 wrote:

My goal is to move.   I do not like the area or the house and want to move.  I currently owe more than it's worth so I am trying to pay down the mortgage in order to be able to sell.

---

I'm sure each lender is different but my mortgage is with Chase and they let me choose several ways to pay extra on just the principal each month.  I can either designate an additional amount to my automatic regular payment that applies to principal only or I can manually enter the amount extra each month to apply to principal.

Check with your lender to see what their options are.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[ji9]

We are in New Hampshire and the prices here are still going down.  So could be a situation for the next 1-2 years that if you keep waiting the prices will keep falling and you will continue to get more upside down on the mortgage.  Good luck with whatever you decide to do. 

[StartingOver10]

You can go to bankrate.com and put in your ORIGINAL relevant figures (starting amount of mortgage, interest rate, amortization period etc)  and print out an amortization schedule that shows how you were supposed to pay in accordance with your original mortgage. You may actually have this amortization schedule in your closing paperwork already. This is your starting point so you can see where you are and where you need to be.

Then you can see how far upside down you are now by comparing current market value to your outstanding mortgage balance and closing costs. If you have the cash to pay that difference then, make a large principal payment with your regular payment designating the additional principal reduction in accordance with your lender's instructions. If you don't have all the cash to make a lump sum payment now, you can go onto bankrate.com and play around with the mortgage amortization calculator to see how much additiional you have to pay to get to where you need to be by the time you want to move.

Naturally the biggest bang for your buck is to pay the lump sum now so that each month your interest is caculated on a smaller outstanding principal balance. While you are on bankrate.com you can put in the figures both ways to show how a lump sum paydown will save you X months or years and how much money you save doing it. You can also input an additional monthly figure and it will show you how much time and money you save.  I say the lump sum is perferable when you have a short time horizon like you do, but not everyone has access to a lump sum to apply toward their outstanding principal balance.