<p>Interest on a mortgage is not front loaded. If you divide how much of any payment is interest by the balance, it is always your interest rate.</p>
<p>We were happy we prepaid an extra $500+ per month on our Mtg, so weâre able to pay it off years before it would have otherwise been paid. We did refinance a few times along the way too. Felt great having it fully paid off before H retired and our income shrunk. Happily, income in retirement hasnât shrunk as much as we expected, especially since we were done with mtg and tuitions. ;)</p>
<p>It has been a happy surprise how much easier it is to pay for just kiddoâs room, board and living expenses than we were oaying before with tuitions, mtg and U expenses. We are traveling more than we had expected and enjoying puttering around and fixing the house. It helps that one kid is fully financially independent and saving himself a very hefty nestegg. </p>
<p>@dstark, I was mistaken (happens at least twice a day). Some states still allow prepayment penalties. Some have outlawed them entirely, others have limited them. Afaik, FHA loans donât have them. </p>
<p>IxnayBob, ok. Thanks again. :)</p>
<p>Congrats Barrons.
Just attended a retirement party for a coworker whoâll be done this week. Out of the fifty or so who attended, there were about a half dozen who are already retired and they all chose to sit in one table. And they had bigger smiles and were more boisterous than any other group, and they werenât comparing prices of Depends - talk about trips to FL, Vegas, etc. and what they did with their grandkids seemed to rule thereâŠ</p>
<p>Yes, you can always call lender about pre-payment penalties and they will tell you. </p>
<p>H and my mom and me partially are the only ones retired among our sibs or inlaws so far. Dad still works part time as. BIL(Hâs bro) is starting to contemplate retiring, maybe in another 5 years or so. My younger sis is thinking of retiring from teaching in 2+ years and then switching to subbing. </p>
<p>We are going to be âaheadâ by keeping our mortgage, as we are only paying 2.5% interest rate. We have better returns on our other money and have the small tax deduction of the mortgage. However if having the mortgage is holding someone back from retiring, and they have enough money to retireâŠ</p>
<p>Some truly have so many other plans and are anxious to retire âearlyâ - or they have health issues and want to gain some benefits of retirement with some abilities to be active. However many of us will be working until we have full social security (even if they delay taking the SS). My father was fortunate that the business sale allowed him to retire early; good thing for him to enjoy some of retirement before an untimely death from cancer.</p>
<p>I am hanging on to all our insurance - have quite a bit of term ins on H. Would hate to cancel insurance and then lose a financial windfall. The next generation can always have the benefits of strong financial picture. My parents estate was helpful to their kids/grandkids.</p>
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<p>Thatâs what I thought, too. But I canât understand the monthly payment assuming that. If I get 100K 15-yr fixed at 5%, the monthly payment is about $800 or $9,600 a year. Interest on $100,000 for the year at 5% would only be $5,000. Wouldnât that mean about half of your payment in the first year goes to paying off principal? That seems to contradict that the first year payment mostly goes to the interest.</p>
<p>We both got 30-year level premium term policies when we were in our mid-30âs. My anticipation is that it will be so expensive (even if there are no health issues) to continue that coverage on an annal basis when the level premium expires, that we will let them lapse, unless maybe one of us is seriously ill.</p>
<p>I do have a small whole-life policy that I could probably keep for a reasonable amount of money, but weâll have to see.</p>
<p>On one of my rentals, I had two mortgages, both around 6%, but I didnât have enough equity to be able to refinance (you typically need at least 30%). So I added some cash and was able to refi both mortgages into one mortgage at 3%, giving me an effective return of 9+% on the extra money I added. Totally worth it in that case.</p>
<p>Personally I focus much more on cash flow, and Iâd rather pay off the mortgage and lose the payment than have the money sit in my checking account or hope I could make more in the stock market.</p>
<p>SOS the cost of term gets prohibitive as notrich references. </p>
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Yes - on a 15 year mortgage, that is typical. On a 15 year 3% mortgage, the interest is only 36% of the payment.</p>
<p>On a 30-year mortgage, it is much higher.</p>
<p>It is heavily a function of the interest rate as well. On a 4% 30 year loan today, the interest is about 70% of the payment. In the bad old days (my first mortage was at 10%, remember those?), interest could be 95% of your payment.</p>
<p>ETA: Hereâs an amortization calculator if you want to play with some numbers: <a href=âAmortization Schedule Calculator | Bankrateâ>http://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx</a></p>
<p>Oh, yes. We used to have 11% mortgage. </p>
<p>Interesting article on the 4% rule:</p>
<p>[The</a> 4% rule isnât broken; it is just badly misunderstood](<a href=âhttp://www.cnbc.com/id/102165628]Theâ>http://www.cnbc.com/id/102165628)</p>
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<p>Just play with a calculator. </p>
<p>You can find problems with a 4 percent withdrawal rate for 30 years.</p>
<p>The biggest issue in retirement is probably medicare. We start taking away medicare benefits and people are going to have a lot of financial problems.</p>
<p>The cost of health insurance for a 64 year old is quite high. I shudder to think what the cost would be without medicare for an 80 year old. </p>
<p>@dstark, I agree: I think 3% SWR will seldom fail. 4% is, in my unproven personal view, a SWR from the past. </p>
<p>Yes when our level payment term insurance ends, we of course wonât continue (as others have said, cost prohibitive). Once we had enough paid in other insurance (where dividends paid the out of pocket cost) we let that pay the premiums. Our financial guy said the kind of insurance is on the two ends of the spectrum (term insurance, and insurance that is on the other end). Will tell our kids only to get term insurance.</p>
<p>How much would it sting to have someone die a few months after you decided to stop when still paying level term insurance premiums⊠I guess you always look at cost and benefit, or if you are feeling particularly financially stretched - how that is affecting your decision-making.</p>
<p>Most people have the goal to not pay a mortgage in retirement, using the money for other things.</p>
<p>Sometimes refinancing a mortgage doesnât make sense if you can pay it off, you want to move, other variables. You may have plans - we kept a particular mortgage because we werenât going to stay in the home. Turns out we stayed a few years longer than desired because it was not in a great school district so it needed the right kind of buyer.</p>
<p>Bad news⊠our home insurance went up again⊠which makes it a 34% increase over past 2 years. </p>
<p>Good news - The $1500/year is still tolerable (and probably reasonable for $300K house). The Sept 2013 local flooding that drove up the rates did not impact our house, so Iâve decided to change my initial sticker shock into a Thankfulness moment. </p>
<p>^ Time to shop around.</p>
<p>Whatâs your deductible?</p>
<p>Hoping thatâs not a snide âinâ joke, NRE. If it is, wow thatâs sad and rude. I imagine the expected cost of homeownerâs insurance is going to depend on both the area and what kind of coverage COmom wants.</p>
<p>^34% increase in two years seems steep. Iâd say the same, time to shop around. When our insurance went up like that several years ago, we shopped around and found a better insurance.</p>