What Paying an Extra $1000/Month Does To Your Mortgage 

In the USA, individuals living in cars due to partial homelessness result from a complex interplay of factors. High housing costs relative to income, stagnant wages, and income inequality drive this issue. Job loss, weak social support, medical expenses, evictions, and lack of affordable housing also contribute, while systemic problems and inadequate policies further perpetuate the phenomenon.

Always happy to come across channels like this, for investors to maximize their compounding power I feel investors should be focusing on under-the-radar stocks, and considering the current rollercoaster nature of the stock market, Because 35% of my $270k portfolio comprises of plummeting stocks which were once revered and i don't know where to go here out of devastation.

We paid off our 15 year in 10 years with overpayments. We really hit the principal hard while we were both working in the first five years before kids came along. Also, given how you pay more interest at the start of a mortgage, I’m glad we were able to knock it down more then. Now that I’m home full time with our kids, I’m so grateful that we don’t have a mortgage payment anymore.

Putting half of my Salary into my portfolio at the start of each month has always been my approach. My second approach is to hold off on selling for at least five years, but as of late, my portfolio has seen a significant fall with losses of around $65k, Please what can i do?

One thing I'd like to add is to always, and I mean always, when possible, pay the most you can at the beginning of these loans. The vast majority of the interest is front loaded, so the more you can pay off in principal in the beginning, the more you'll save! For example, if you have an extra 5K and the means, instead of putting 1K every month towards the principal, placing the whole 5K at once will save you more over the life of the loan.

Sadly, banks continue to stumble, mortgage rates is on the rise with higher imports and lower exports, yet the FED is to lessen cost. So, where do we grow and safeguard our money now? something will eventually break if they keep raising interests and quantitative tightening.

One thing to mention....refinancing RESETS the amortization table and starts with the max interest/min principal ratio all over again. So you should always run the numbers before you refinance, regardless of potential rate improvement, to see if you'll be slowing down the payoff pace vs a "bad" interest rate you've held for awhile.

Recently bought a house and I have a 6.75% rate. Just under a year I paid an extra $800. which has saved me over $4,800 off the back of my loan.

I loove how you break everything down so easily! Thank you for providing these!!

Wife and I are making double plus mortgage payments and have been able to reduce the principle by 80K in the last 15 months. May not make sense numbers wise, but its a great feeling seeing the debt number decrease substantially. Still investing for retirement plus government defined pension plans.

Great video.. your information gave me a lot of insight when looking and buying my first home.

I appreciate all thw hard work into making these video's. They have been so helpful for my family and i on learning all the deatiks of home ownership.

I remember when rates were 3%, personal finance folks were suggesting to put all your extra money into investments because you could earn more than you’d pay in interest… now that the interest rates are close to historical stock market returns it’s interesting to see how we do the math now. Thanks for the video!!

Such a valuable video, thank you!!

As December approaches, the home I purchased in 2023 has appreciated by $60,000 since my acquisition. However, the downside is the diminishing value of the dollar. I am currently contemplating strategies to reinvest $300,000 in the real estate market.

Compound interest IS the 8th wonder of the world. It goes both ways- earning it and saving it. Thank you for this video👍

I’m not kidding when I say, I bought a home for that same price in your example ON THE DAY YOU RELEASED THIS VIDEO. thanks!

I appreciate you making this video! It's the same perspective I have. The more I pay now, the less interest I will pay over the lifetime of the loan. If I make no extra payments, at my interest rate I will literally be paying for this house 2x over. LOL. Still a much better deal than paying $100 more per month for rent in the city I was living in before... I'm sure the rent for that apt will continue to go up as well.

Other points of distinction that I’d recommend are: What the difference is when you put 20% down and avoid PMI. Starting with a 15 year versus a 30 year mortgage. The numbers are vastly different when you do both scenarios. It’s the road less traveled but it’s a great goal to attain. My husband and I did this in SoCal when we bought our house: 20% down (took us patience to save up while our peers bought right away) and doing a 15 year mortgage.

Great content Javier,I’m going to watch it several times,we planning to buy a house at the 4 months of 2024,planing to hold to it for the next 10 years until I retire in Peru.

The way i did it was simple. Every day I packed a lunch and I did not buy fast food I paid 15 dollars into the. principal. Every day and I'm now mortgage free. People dont take into account how much money they spend on fast food nonsense.

Love your video ❤

Paid our first mortgage payment a few days ago....only a few percent went towards the principal. I was so pissed I made the planned extra payment early just to see the number go down lol We plan to pay it off in just a few years, but it's insane to see how much interest we'd pay if we kept to the 30yr schedule

Nobody is getting scammed at 7.5%. That's a pretty typical rate in the history of rates. Now home affordability does suck, but that's a different issue.

I refinanced my mortgage a couple years ago from 4% to 2.25%. All the money I saved on my mortgage payment I put towards the principal

Recast can make a change on the monthly payment too🏡

I've been doing this for the last 10 years. Only 5 years left BB.

I'm going to have to start renting out my bhole to help pay the mortgage interest

You’ll be surprised how many people don’t understand how interest works on a mortgage. I once heard someone say “if you buy a home for 200k and interest is 10% you’ll pay 20k in interest “ 😂

Great video!

You taught me some new stuff 💯

People forget that they can change the interest rate but never what they paid for the house.

thank you brother

This help breakdown how the mortgage loan works!

Recently my wife and I just sold two real estate properties for a total sum of $875k. We plan to purchase a new house next year, the cash is just sitting in our joint savings account. What do you recommend we do? I will appreciate any suggestions.

The total mortgage payment, contains principal, interest, homeowners insurance, and property taxes.

Mortgage rates are currently at an all time high since 2000(23 years) and based on statistics on inflation, we might see that number skyrocket further, a 30-year fixed rate was only 5% this time last year, so do I just keep waiting for a housing crash before buying or redirect my focus to the equity market.

I've had to remortgage twice. Credit cards. My husband loved them.

Always enjoy your videos Javier. Keep it up bro

So you’re saying have more money to pay off the house faster… who has an extra $1000 per month?

9:04 I would never consider whether or not I was ‘pulling one over’ on a bank. If they saw it that way then paying the principal in advance wouldn’t be possible

I will never cease to be amazed at how we have normalized interest and the payment of it. It’s criminal in the purest sense of the word.

Our dream: We are downsizing this year. Taking the equity of the sale after paying off the mortgage, which will be approx. 275K accounting for a possible 20k drop at what our current analysis home price. Then moving out of a popular city 2 hours away for a 300k-400k home, with 5 year left of a working wage. We are giving up our 3%

interesting calculation! Of course, not everyone can just pay $1000 more. But when I think about stay at home wifes who perhaps have time to take on a small part-time job and think that $1,000 is not necessary, then it would definitely be an incentive to add the interest they save to it. the hourly wage would be extremely high!

Great Video. I had a question in regards to if it's even worth buying a home. So If I buy a $400k house at 7.5% interest and don't make additional principal payments, then after 30 years, i'll have paid over $1 million. So if that same house is worth double ($800k) after 30 years and I sell, then I would realize a $200k loss. This goes against the mass messaging of Real Estate is the way to make money and increase wealth right? And it's because of the extremely high interest charges over the 30 years.

Javier: My CU does not have the option, on their website, to place an additional amount towards the principal. I just has the scheduled payment amount section. If I chose to send an additional $1000 per month, how would I know that it's not going directly towards the interest?

What if you need to buy a house right now. Can you refinance later for a lower interest rate

Hey have you heard of velocity banking? You can pay your house in 5 years i started doing it i hope you can do a video on it

Would be cool to see a comparison between a biweekly payment vs. additional principal payment. What are your thoughts between the two

Also worth noting is all the savings come off the back of the loan. So if you want the savings for something like your kids' college funds, this might not work for that. Plus inflation is likely to continue to some degree, so on a 30 year fixed your last payment will be a much smaller percentage of income than your first payment.

I'm currently doing biweekly and an additional $425 a month. Someone recently told me to look into doing weekly to help a little bit more compared to bi-weekly. What's your thoughts on that? Thanks.

Hard to beat 7% return tax free. If you got screwed into a 7% loan, paying off a home has never been more valuable.

Interesting. Can you make a comparison using a 15 yr mortgage?

When it comes to living we are screwed either way! If you stay in apartments it’s over priced and it goes up every renewal and you will never own it .., get a house you pay 3 times as much because interest rates smh .. in my opinion just get the house because at least you can pass it down and your kids can live rent free

Ive also heard to pay a big lumpsum after your down payment but within the first 90 days of purchase.. whats the truth to that.

I get what you're saying, but wouldn't it be more beneficial to make baked mac and cheese?

What is a better plan, pay extra every month, one large extra payment once a year, or pay extra twice a month. Thanks and love youe videos

you're doing the lord's work with these videos, thank you brother. Keep up the good work and let the masses know whats really going on with home ownership!

using time invariant dollars is very misleading. the real question is what are the options: assumes you have the money. What other options do you have to generate investment return? At 7.5% mortgage interest, this might be a good idea. back when rates were 3%, there we good alternatives. Additional considerations are: how stable/reliable is your income, and what is the long-term rate of house value increase? be sure to consider variations for the size of the house. Suppose you save your extra income, buy a second house for rental some years later. the rent pay the interest, taxes and ins + initially, though you are somewhat cash flow negative due to payment of principle. Over years, the rent rate increases until you are cash flow positive. consider all options, weigh risk

If my interest rate is high I’ll take the guaranteed savings over what a mutual fund might do

Remember you get your interest rate back on taxes, so dont pay off your house what you got than refinancing and buying other properties is what you need to do keep the debt it will help you as well

With investing while still having low-interest debt, the general rule is to pay down the debt if it's above 7%, since that's the average over the long term that you can expect a return (adjusted for inflation). Personally I think you should be minimally investing regardless because this generation probably won't want to touch their home equity in retirement like boomers do, so will need more funds invested. Plus, we're less likely to have pensions.

Javier, have you ever had experience with a buyer that had no credit score, or had to go through manual underwriting? I’ve heard it’s possible (Dave Ramsey of course promotes it) but I don’t know of anyone who has actually done it. I’ll be 25 in January, single income, and I don’t have a credit score but I’ve got my 20% saved, looking to buy sometime in 2025. Could I even qualify with only 1-1.5 year of credit history or do I go for the no-credit route?

One thing I love about a mortgage I have in the Dominican Republic is that with each payment to your principal, you can elect to either shorten your mortgage payoff date or reduce your monthly payment EVERY TIME you pay towards your principal. I don’t know how they do it, but I wish it was the same in the US. Eliminates the need to refinance if you want to lower your mortgage payment by owing less every time you add to your principal.

bought a house for 400k and interest rate is 2.9 is it worth pay extra?thanks javier

Javier, I bought in 2021 and would like to remove PMI from my loan. Do I simply just get another appraisal from lender to remove. Seems about the right time since homes around me are selling way above what I paid for mine.

Aus 1mil house + so payment around 6-7k a month for 30 yrs

What you forgot to include is a 20% down payment. So the loan amount would be $320k (not $400k).

what website is that?

So the interest is actually 100% or more

How about if you can't even afford to buy a small 1 bedroom apartment even when you're working full time and having a college degree? I can't even imagine having an extra 1k a month.

but don't house loans always have it in writing that there's either an extra cost for paying more per month or doing an additional payment... or they don't allow it? I know this happens so if you can't do it or if it costs even more to do so, aren't you basically stuck with no option?

I pay 4000 a month for a 3 bed 1 bad house in morgage today whete am I going to get 1000 more each month

Any one know which website he’s using to calculate the additional principle payment ?

Why are you guys so eager to give the bank your money as fast as possible? "I'll have less money now (certain) so that I'll have more money in the (possible) future." It doesn't make sense to me, sounds like advice the bank would give.

Step 1: Don't take out a 30 year mortgage, especially for a house that's significantly above your pay threshold. Step 2: Do take out a 15 year mortgage, within reason for what you could respectively buy with your current pay threshold. Step 3: Bask in the glory of realizing that you have your house paid off before you die, rather than after.

Can someone enlighten me - How does the extra payment towards principal executed in reality ? Do I have to commit to a $1000 for example for a specific period ? Or do I have the option to change the amount month to month as per my convenience ?

After paying $1000 more per month for so many years and throw in a recast evey few years. How much more savings would that make or is recasting a bad idea if always paying more than the minimum?

Question, is it better to make an extra payment monthly or one big extra payment annually? What saves me more money over time?

I never hear about how to balance making extra payments with dealing with job insecurity. It is fine making extra principal payments, if you are covered for a job break.

My first mortgage was 7.50%. I took the $150k of proceeds into a $420k 2nd house at 4.something percent. Refinanced down to 3.5% and sitting on a $2,100 on a $900,000 house with 4,300 sq feet. A 2 bedroom apt rents for almost that amount. I've got 5 bedrooms. Real estate is your best way to create wealth. Don't overthink it. I've seen interest rates above 15% in my lifetime. Rates drop and you move to refinance. Do I feel our mortgage system is pro-lender? Yea, staying out of the game won't work for you either. Don't overthink things. Pay extra if you can. You probably won't stay in your first house anyways.

I really hate this overuse of scam. It is not. The paynents and rates are clearly disclosed to you before signing. This higher rate environment sucks compared to the people who got low 2s or 3% rates. But it is not a scam.

Success depends on the actions or steps you take to achieve it. Building wealth involves developing good habits, such as regularly setting aside money for sound investments.

Going with a 15 year loan instead of a 30 year makes a world of difference

I'd prefer to spend the extra on DIY improvements to the home that will raise the value of the property, give me a nicer house to live in, and grow my skills along the way.

Is there any difference in the amount of interest paid if you get a 15 year versus a 30 year where you pay extra?

Javier, does it make sense for people (who have the money to do so) to put in that extra 1k if they plan on living in the house long term or vice versa? Like.. if you plan to move within 5 years, does it still make sense to put in that extra money toward the principle?

Can you do one when you put in 10k to principal every 6 months, so technically 10k twice a year.

Interest rate is all that matters in this equation. If you can invest at a rate above your mortgage rate, do that. If you can’t invest (consistently) above that rate, pay more on the mortgage. If it’s even kind of close, I’d pay the mortgage down personally, because that’s debt and a guaranteed rate. The S&P averages a 8-12% return (depending on when you look), so if you assume 8 and your mortgage is 7.2… pay the mortgage. However, if you assume 12 and your mortgage is 5, invest in index/etf. Paying the mortgage is 100% safer 100% of the time, but a traditional savings account is safer than a 401k.

Its just a smarter to put that same 1k into an account with an avg of 6-8% return

I'd rather buy a house that's cheap and own it in a year

That person can do 1000 extra a month at 7.5 and 5-10 years later refinance in to 5.5 interest and keep paying 1000 extra to monthly payment.🤔

💯🔥

7.5% interest rate is already adding that extra thousand.

Bleep a house!

So what you’re telling me is down payments are the way to go. Not only does it lower your monthly payment, but it allows you the flexibility to add payment to principal and further reduce the amount of interest paid?

I guess it is better to pay off the house than invest this money into something long term. People move every 7 years so things change.

If your going to do this. you might as well have gotten a 15 year mortgage.

Recently closed on a 2/2 900sf condo here in SF for about $860K, in a 82yr old building. Meanwhile my brother bought a 2700sf nearly new 4/3 house with large backyard, front yard, room on each side, 3car garage, for $490K in the Central Valley (suburbs 🤮) I have a view of the GG Bridge, the Bay/City/Ocean, Karl rolls in each morning it’s beautiful. He has a view of his neighbor’s identical homes and yards I don’t have a point

Wouldn't it be much better, to add $1000 a month to a high yield savings account giving over #5%? Seems like that would be much better.