People are Mortgage Incompetent.

[integral]

There's something about getting a mortgage where people have this mindset where they they just don't pay it off.

They pay the principal and they pay the interest every month but then they have no strategy to pay it off as soon as possible.

My mother I don't know what's happening with her brain but not a single dollar has been spent reducing the principle of the mortgage for 25 years.

Every time she gets money she immediately spends it on nonsense, a new couch I knew whatever, a renovation, of vacation... so no. And my brother has the same problem. When I try to counsel him in any way he has all these mechanisms that he explaining away why that it was all unavoidable. In reality it was bullshit. And he can't wrap his head around what it takes to pay off a mortgage.

I spend 1200$ cad (870 usd) a month MAXIMUM total everything, not because I'm working hard to avoid spending, it's because I just want nothing.

When you get a mortgage you have to pay that thing off within five years, it is a difference between being poor and having Financial Freedom.

Edited 6 hours ago by integral

[Hafiz]

How do you pay if off in 5 years if that means a mortgage payment that’s bigger than your monthly income?

[integral]

27 minutes ago, Hafiz said:

How do you pay if off in 5 years if that means a mortgage payment that’s bigger than your monthly income?

At the end of the year, you're allowed to pay a lump sum to pay down your mortgage of about 10 to 20% also every month you're allowed to pay down your mortgage by a maximum amount so it could be between three and $5000.

If you're two people working a full-time job, it can take you about five years to pay off a mortgage like this if every month you put 5000 in plus at the end of the year, you put 10 to 15% of the total mortgage so that's depending on what your mortgage amount is could be $40,000.

Quote

Here's the breakdown for $400,000 at 7% on a 25-year amortization:

Standard max prepayment (regular monthly + 20% lump sum once a year):

• Monthly payment: $2,802
• Annual lump sum: $80,000 (paid once a year on your anniversary date)
• Time to pay off: ~4.6 years
• Total interest paid: $71,335

Truly maxed out (doubled monthly + 20% lump sum):

• Monthly payment: $5,603
• Annual lump sum: $80,000
• Time to pay off: ~3.2 years
• Total interest paid: $52,608

 

Edited 1 hour ago by integral