I just got my year end mortgage statement, and because taxes in my town have gone up, yet again, the mortgage will be increasing by $61/month. Since we bought the house in 2004 the payment has increased by $100. GRRRRRR!!!!!!!!!!
If I want to pay the 'escrow cushion' of $167 it will lower the new mortgage payment by $13 or so....big deal.
The good news is that my principle balance went down by $3075, so the new balance is $197,378.84.
I have never made an additional principle payment on the mortgage, because I have always had too much other debt. But I wonder if it would be worth it to allocate some of the extra money (maybe $25 - $50) that I would have put toward the truck payment to the mortgage....what does everyone think?
Mortgage Going Up.....Blasted Taxes!!!
December 13th, 2006 at 03:40 pm
December 13th, 2006 at 03:53 pm 1166025198
The reason it's better for you is this: your mortgage company is allowed by law to take an amount above and beyond your actual tax and insurance payment as a buffer to guard against them being short of funds, depending on the timing of the payments. Rather than them getting the interest on that money, you could instead.
When I switched, I got that buffer back (about $1700, but my taxes are through the roof), and used it to start a new checking account, from which my taxes and insurance are paid. I direct deposit the appropriate amount of funds right into that account, which is separate from my other checking account, so I'm not tempted to touch it during tight months. Then, each quarter, I pay the tax bill out of there. In some cases, your town may allow you to pay by credit card, or auto draft from your account, which would make it easier on you.
As for the extra $ toward principle each month, I guess it depends on what your mortgage rate is vs. your car rate. I'd put the extra toward whichever is higher...
Good luck.
December 13th, 2006 at 04:01 pm 1166025660
December 13th, 2006 at 04:01 pm 1166025694
December 13th, 2006 at 04:16 pm 1166026603
December 13th, 2006 at 06:03 pm 1166033039
When you open it, put in all your info in the top portion, and you can change the monthly payment amount under the "Scheduled Payment" column. Look at the "Total Interest" cell and see how much a few bucks more every month will impact your interest balance. It's astonishing!
December 13th, 2006 at 09:07 pm 1166044069
$25 or $50 a month wouldn't make a huge differance, I'd think. You may be better off puting that amount towards additional emergency fund savings, or save for something special like a vacation.
As for taxes and escrow, I hear you. We haven't even gotten our tax bill yet from the county and my mortgage company wanted an extra $100 a month "just in case they go up". Since they likely will go up, the extra $100 a month probably isn't a bad idea, but still, you'd think they'd wait for the actual bill to come in first!
December 13th, 2006 at 09:22 pm 1166044967
December 14th, 2006 at 06:06 am 1166076400