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Sunday, April 20, 2008

Dave Ramsey's Mortgage Calculator

My man Dave has a way cool mortgage caluclator. It shows you how much you save by paying your home loan off early. Check it out.

9 comments:

  1. Yes, an interesting calculator.

    But, why would anyone payoff a mortgage early? Shouldn't we keep re-mortgaging, and using the equity to buy cars and vacations and dinner at restaurants and all the other things that we can't really afford?

    After all there is no risk, if houses slump and the mortgage becomes unpayable, the democrats will insist on a bailout.

    Anyone who pays off early will not get all the goodies, have to pay for all the folks that need to get bailed out, and generally will be treated like the schmucks they are.

    ReplyDelete
  2. Hey, don't blame the Democrats. There's plenty of Republicans that are running about like ninnies wondering if they need to promise bailouts in order to keep their fat behinds in Armani suits for another 2 or 6 years.

    ReplyDelete
  3. Actually there was a somewhat counter intuitive strategy put forward in Consumer reports of investing what you'd use as the extra payment. They looked at historical market data using a sliding window of ten years. Most of the time if you cahed out at the end of a decade you'd end up with significantly more to pay down your mortgage than if you made extra house payments. Part of this was due to the difference of how investments are taxed, and low mortgage interest rates. In the cases where you earned less than the savings of paying down early, the difference was almost always small.

    So their conclusion is that you'd reap a greater return on your investment most of the time, and when you didn't the loss was generally small.

    ReplyDelete
  4. Anonymous7:23 PM

    Paying off a mortgage early with today's interest rates is a seriously silly thing to do with your money. Why pay off a 5.5% loan when you can earn 10% (or more) easily with that same money?

    It's quite silly really. People should be investing that money into their retirements, not trying to pay it off early. Ramsey quite foolishly wants people to invest at pathetically low 5.5% to 6.5% interest rates (essentially, since that's what paying off your loan is doing in essence).

    ReplyDelete
  5. Anonymous9:53 AM

    I agree with Dave that paying off a mortgage as soon as possible is the ONLY way to go. It not only frees up cash for huge investment options - but it gives you peace of mind, which is the ULTIMATE goal of financial security and FINANCIAL PEACE.

    ReplyDelete
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