Bank Deal: Earn 1.00% APY on an FDIC-insured savings account at Barclays Bank.
As a followup to my earlier note about refinancing our mortgage, I wanted to point out an interesting way of looking at things…
In the comments to that post, Laura brought up the concept of the mortgage “crossover point,” which is the point at which you are paying more toward principal than toward mortgage interest.
In looking at the amortization table for our original and new mortgage, I realized that this is a very powerful concept. Here’s a breakdown:
Under the terms of our old mortgage, and assuming no pre-payments, it would’ve taken 231 months, or 19.25 years, to reach the mortgage crossover point. Given that we were 21 months into our mortgage, that means it would be another 17.5 years before getting there.
Of course, we were were overpaying our mortgage every month, so we would’ve reached the crossover point much sooner. Those payments notwithstanding, however, we were still looking at a relatively long time horizon before our money was working more for us than for the bank.
What about the new mortgage? As it turns out, it will take just over 10 months to reach the mortgage crossover point. So, ignoring the possibility of mortgage pre-payments, we’ll reach the crossover point in January of 2009. Not bad at all.
- How to Become a Millionaire
- How to Get Out of Debt
- The Best Dollars I've Ever Spent
- How Our Estate Plan is Structured
- How We Paid Our Mortgage In Less than 10 Years
- Money Making Ideas
- How to Manage Your Asset Allocation with Multiple Accounts
- Consumption Smoothing - Save While the Saving's Good
- How to Save on Groceries
- How Much Life Insurance Do You Need?
- Eleven Great Books About Money
- Dave Ramsey is Bad at Math (692)
- Dish Network Customer Service SUCKS (534)
- $8,000 Homebuyer Tax Credit (429)
- Pay Off Mortgage Early or Invest? (424)
- How to Claim the First-Time Homebuyer Tax Credit (352)
- Termite Control: Sentricon vs. Termidor (325)
- How Much Should You Pay a Babysitter? (284)
- Ethanol Blended Gas = Lower Mileage? (272)
- Reduced Credit Limits? Share Your Experience (256)
- $15,000 Homebuyer Tax Credit (242)
- Buying Furniture off the Back of a Truck (228)
- Will Mac OS X Lion Kill Quicken 2007? (191)