Progress to Date

  • Original Loan Amount: $204,000.00
  • Balance at Beginning of 5-year Goal (1/1/08): $188,983.82 @ 6.00%
  • Balance at Refinance in February 2009: $148,000.00 @ 4.625%
  • Outstanding Balance: $0.00 (PAID IN FULL!!!)
  • Latest Payment Date: April 2011
  • Latest Additional Principal Amount: $17,623.22
  • Amount Ahead of Schedule (since refinance): $121,462
  • Time Ahead of Schedule (since refinance): 7 years 10 months
  • Interest Saved Last Month: $23,972.48
  • Total Interest Saved: $28,435.55 ($1,037.74 on original mortgage; $27,397.81 on current mortgage)
  • Months Remaining in 5-year Goal: 20
  • Average Monthly Principal Needed to Meet Goal: N/A (Goal achieved)
  • Progress List Explained

Friday, May 1, 2009

Monthly Summary: April 2009

Happy May! Spring has definitely arrived in southern New Hampshire by now. The flowers are in bloom, and pale greenery is sprouting out everywhere. This is one of my favorite times of year.

In April we made the second of 120 scheduled payments on our (still relatively new) ten-year mortgage, and the 16th monthly payment we've made overall since setting our five-year goal.

Our mortgage debt was $140,527.63 at the beginning of April. Because we were faced with such a large tax bill last month, we had barely any money left over to make an additional prepayment. However, we are determined to make at least a token contribution each month if at all possible. We were able to send an extra $500 along with our regular monthly payment, meaning we reduced the principal balance by $1,501.17 in April. The balance dropped to $139,026.46 at month's end.

We passed two psychologically important milestones this month. First, most obviously, our outstanding balance dipped into the $130K range. Second, for the first time since we've been paying a mortgage on our house, the principal portion of our regular (required) payment exceeded $1,000. Many personal finance bloggers talk about "snowflaking" when paying off debt; that is, applying any interest savings from the prior month against the current month's balance, and repeating the following month. As time goes by, the interest savings steadily increase the monthly payment amounts, accelerating the debt reduction like snowflakes building up a snowball as it rolls downhill. It's nice to see that effect in action on our mortgage, too. As I mentioned, our regular principal payment this month was slightly over $1,000. If we hadn't made prepayments on our new 10-year loan, that amount would have been around $976; and if we still had our original mortgage and had never made prepayments, the principal amount this month would have only been $835. Small differences can make a big impact over time.

We saved $25.05 in interest in April. We are $7,025 ahead of schedule on our new mortgage, and would pay it off seven months early if we had to stop making extra payments at this point.

We have 44 months left in our five-year goal period. In order to meet that goal, we need to make an average monthly principal payment of $3,159.69 (a slight increase from last month).

April was an expensive month, and May is looking to be almost as expensive. We've had to make a number of annual payments (vet bills, doctor bills, car repairs, tax payments, and so on) this spring, so the cash available to make mortgage prepayments is going to be limited. One bit of good news is that my wife has once again picked up some contract work this summer, so we should have some extra income in the near future to (hopefully) offset our recent shortcomings.


Anonymous said...

Congrats on entering the 130$ I continue to enjoying following your progress.

Refinance Mortgage said...

Although a loan does not start out as income to the borrower, it becomes income to the borrower if the borrower is discharged of indebtedness.