How long to pay off your house?

[guppy]

I've been floating some ideas around for a while. Figuring out if I want to stay in my house forever (meaning I'd start saving cash for an addition as soon as my st loan debts are paid and EF is funded) or start paying down my house faster to build equity so we can move to a house better equipped for a family (better school district, more land, more sq footage) in 5-7 years. I've been reading a bit by Dave Ramsey. I'm wondering if any of you have gotten to the stage of paying down their house (regardless of if you follow Ramsey's advice or not). How long did/will it take you to pay it off? How much extra were you putting towards your mortgage each month?

[jIM_Ohio]

The key you mentioned (to me) is "better school district". If you don't think you will be in your current house for more than 10 years, do not remodel/ add on and expect to get back 50% of the cost of the remodel.

Meaning if you remodel kitchen and add a bedroom for $30,000, you MIGHT get $15,000 of it back when you sell.

Meaning stash cash for new and better house in a better location and do not improve the current house with significant capital. Improving landscaping is a cheap way to improve value of house... look for other things- like painting- which are cheap and help with aesthetic look and value of house if you have the itch to improve something.

[GREENBACK]

or start paying down my house faster to build equity so we can move to a house better equipped for a family (better school district, more land, more sq footage) in 5-7 years.

If you plan to move in a few years I wouldn't be concerned about "building equity". In the end you won't have more money by giving more to a bank. If you want to build wealth you should invest rather than pay extra on a mortgage. As for your ? about how long/much. I've got 8 yrs to go and am not putting a dime extra towards it. DR has great advice for those who want to get out of debt and stay out but it's not neccesarily great overall financial advice IMO.

[My English Castle]

We are sort of there. We have no debt except the mortgage, and we do prepay principal at about $120/month. We would pay it off faster, but I'm currently beefing up the EF to have about one year of expenses there.

With current savings rates, I prefer to pay down the mortgage, but I do see the wisdom in paying off the house. We have a small mortgage, about $50,000

[Shane Watson]

Mortgage is a complete nightmare. Current economy has cost us our little bit luxury. I don’t want to stay the way I am, for forever. So my idea goes with a little bit of upgrade.

[Runaway Finances]

You indicated you wanted to pay down debts before moving or doing an addition if you stay. I recommend a combination of paying down debt and establishing a savings plan. That savings plan can be used for emergency fund, or an addition or principal payment towards a new house. You leave your options open that way.

Don't add on to a house if you are not in a great neighborhood or bad school district. Make sure you would not be overbuilding your neighborhood.

As to investing funds, right now you can't earn a whole lot in many investments, especially anything with a guarantee. Most likely, paying off a mortgage or paying down a mortgage will provide a greater return (ie. not paying loan interest) than any money market or CD that you can get. 5 year CD's are not even paying 4%. Granted, you can't easily get your equity out of your house, but on the other hand it is essentially forced savings. Think of your home equity as one of your "investment buckets". Retirement plans, another bucket. Savings another bucket. The key is to have a diversity of "buckets".

[PetMom]

I know someone who paid off their mortgage with a 15 year loan on a fairly good sized home out more in the country with less proptery taxes. They were relieved and delighted that they had a paid for home.

What ended up happening is the big city close by 'annexed' the area to tap into the big homes that would give them a good property tax - his taxes went up to the hundreds of dollars a month; then you have insurance on your property which is not cheap and if in a big home more space to have electricity and with deregulation of electricity that hit at one point $600.00 a month.

He had never thought that by annexing, ins. prices going up and deregulation of a basic necessity would make owning his paid in full home nearly as much as when he was making just a mortgage payment.

This is something to consider when planning for a nice size paid for home to keep you secure in later years.

[Alex_Adviser]

Adding some additonal money to your monthly payment could cut your payment time in half and save you thousands of dollars in interest.

According to my calculations, if you're paying a 30-year $200,000 mortgage at 6%, your monthly principal and interest payments are somewhere around $1,200 per month (this doesn't include money you have going to an escrow account for property taxes and insurance).

I actually got a raise of $1000 per month of which i contributed $500 more towards my monthly installment and eventually I am actually able to pay my mortgage at a very fast pace.

If you add the $500 -- bringing your monthly payment to $1,699 -- you'll pay off your house in just under 15 years. You'd also save more than $128,000 in interest, paying just $103,249 instead of $231,676.